Laws and Regulations - Compensation and Pay Guide

For many employees, an essential part of their motivation to work is compensation and pay. Compensation refers to how much they shall earn for doing a job. Different types of employees in any organization means that compensation and pay have a range of factors that affect them. HR managers need to ensure that they develop compensation programs that are fair for all, and attractive for high achievers in an organization.

Compensation Laws and Regulations

The Fair Labor Standards Act (FLSA) offers a clear outline of the compensation rules for employees. It is in this act that the framework for minimum wages is clear for hourly employees. Furthermore, it clearly establishes the total number of hours employees must work per week or month. Working outside these hours will mean that the employee is entitled to overtime pay. Not all employees are the same regarding overtime pay. Hourly employees are entitled to 1.5 times the rate per hour when they work overtime. However, there are salaried employees and other specialized categories of exempt employees. For these employees, their payments are weekly or monthly or cover a fixed payment period.

Benefits Regulations

Though there are blanket regulations that are shared to cover the entire nation, it is worth noting that each state will have its regulations. There is the federal minimum wage that is the lowest amount that a state should offer hourly employees. However, some states have a higher than minimum wage option based on the living expenses within that state. Employers in these states need to pay whichever rate is higher. In addition to cash received for hours, weeks or months paid, there are benefits as well. These refer to the compensation that the employee does not receive in cash that will vary from one employer to another. There are some which must be issued by law, while others are optional. Here is a list of the benefits that legally are part of compensation packages: -
  1. Workers compensation insurance
  2. Social Security and Medicare benefits
  3. Unemployment insurance
  4. Disability insurance
Some of the optional benefits that can be on offer include: -
  1. Non-production performance benefits
  2. Tuition assistance
  3. Paid time off
  4. Child Care spending
The HR department is responsible for the management of the compensation, benefits, and rewards that employees receive. The compensation and pay that they manage include:
  • Salaries
  • Commissions
  • Pensions
  • Bonuses
  • Medical insurance
  • Reward schemes
Employers must abide by compensation laws and regulations to legally operate their businesses. Payroll is a crucial element as through it; the state can collect several taxes. The employer first withholds these taxes, and then pays to the relevant bodies on behalf of the employee. The taxes included under the payroll taxes include federal and state unemployment taxes, social security, Medicare as well as various withholding taxes. HR managers need to be familiar with the Fair Labor Standards Act to determine whether the full scope of compensation for employees.