Bauer, Human Resource Management
SAGE Publishing, 2020
Lecture Notes
Chapter 13: Managing Benefits
Learning Objectives
13.2 Identify the different types of legally required benefits.
13.3 List the additional healthcare requirements certain U.S. employers must abide by.
Chapter Summary
This chapter provides an oversight of the types of benefit programs many companies provide, primarily
to their full time employees. Some programs are mandated by the government in the form of employer
Annotated Chapter Outline
i. Introduction
A. Gig workers complete projects or tasks for pay.
ii. Benefits As Rewards
A. Seventy percent of civilian workers have access to medical and retirement benefits.
B. Average benefit costs for employers are 32% of total compensation costs.
C. Employers strategically select and design value added benefits.
i. Attract potential employment candidates
Bauer, Human Resource Management
SAGE Publishing, 2020
i. Funded through Federal Insurance Contributions Act (FICA) withholding by both
employer and employee
ii. Retirement income for those at least age 62 who have received 40 work credits
during their lifetime and apply for the benefit. Benefits can be increased by
F. Family and Medical Leave (FMLA) is time off work to attend to a family or medical
issue. The Act provides job security up to 12 weeks during this unpaid leave of absence
(up to 26 weeks to care for an injured or ill service member).
G. Paid parental leave offered in some states. This practice is more commonplace in the
EU.
H. Other government health care laws most employers are expected to follow: ERISA,
13.2
d) Health savings options recognized by the Internal Revenue Service as
offering tax advantages for the purpose of reducing overall out-of–
pocket health care expenses for individuals, see Table 13.3
ii. Dental and vision plans
Bauer, Human Resource Management
SAGE Publishing, 2020
a. Although some states mandate, 65% of employers provide STD (SHRM
survey).
ii. Long-Term Disability (LTD) is income protection for longer term illness or injury.
a. Seventy-two percent of employers provide (SHRM survey).
E. Retirement Programs
i. Government oversees most private sector voluntary retirement programs via
minimum plan standards under ERISA.
a. Example: Defined benefit plan participants have certain protection
rights (PBGC).
ii. Defined benefit plans
a. Traditional pension plan: Employer provides participants with
credit
iii. Defined contribution plans
a. Balances are based on employee and/or employer contributions.
1) Sixty-two percent of employers offer.
2) Participants direct their own investments.
3) Account balances are portable upon switching jobs.
iv. Profit-sharing program
a. Pay for performance based on company profitability
b. Employer contribution only and discretionary
Bauer, Human Resource Management
SAGE Publishing, 2020
v. Employee stock ownership plan (ESOP)
a. Rewards employees when company share value increases
payout when employee leaves the company
vi. Money-purchase plan
a. Contribution to company fund
vii. Individual retirement plans
a. May be employer sponsored but doesn’t have to be
b. Traditional IRAs and Roth IRAs, see Table 13.4
viii. Simplified Employee Pension Plans and Savings Incentive Match Plan for
Employee IRAs
a. Employer contribution to traditional IRA under a SEP
H. Work–Life Programs
i. Paid time off (PTO) includes sick time, vacations, holidays, nonwork-related
illness, personal days plus other circumstances. Generally accrued based on
length of company service. Trend is more PTO flexibility.
ii. Other work–life balance programs include compensatory time off, child and elder
care programs and subsidies, flextime, telecommuting, college savings plans,
beneficial to their predetermined needs and budget. Many of these choices can be
purchased on a pretax basis, according to Internal Revenue Code section 125.
C. Benefits should be offered in a manner which is nondiscriminatory manner and
consistent with many laws including Title VII, Age Discrimination in Employment,
Bauer, Human Resource Management
SAGE Publishing, 2020
Pregnancy Discrimination, Americans with Disabilities, and Same Sex spousal benefits
for voluntary benefits.
D. Employers receive tax deductions for the qualified benefits if they meet certain