A | B | C | D | E | F | G | I | J | M | N | O | P | R | S | T |
A
administrative exemption
if an employee qualifies for the administrative exemption under the Fair Labor Standards Act (FLSA) test, he or she is not covered by the minimum wage and overtime requirements. In determining whether the administrative exemption applies, employers need to consider job duties and responsibilities, as well as the salary basis test.
alternate job title
refers to jobs with similar duties and responsibilities that are grouped together for purposes of gathering salary survey data.
B
bonus
a way for employers to recognize and reward employee accomplishments on a one-time basis. Some companies use an annual bonus program as part of their overall compensation package tying the bonus to company and individual goals. Other bonus programs reward employees during the year for discrete accomplishments, e.g., a spot bonus might be awarded upon successful completion of a project.
Bureau of Labor Statistics (BLS)
the principal fact-finding agency for the federal government in the broad field of labor economics and statistics. BLS collects, processes, analyzes, and disseminates data related to unemployment, job growth, increases or changes in wages, employee benefits, turnover, cost-of-living, and worker productivity.
C
cafeteria benefits
a benefit plan organized pursuant to Internal Revenue Service Code (IRC) § 125. In addition to regular group insurance benefits provided to employees, a cafeteria plan provides employees with options for additional fringe benefits and they can choose between the optional benefits up to a designated dollar amount. For example, flexible spending accounts (FSAs) are § 125 plans.
clerical jobs
these jobs are generally white-collar and involve clerical, sales, technical support and similar work. Employees in these jobs are ‘non-exempt’, generally work in an office environment, and are covered by the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).
commissions
are the way most salespeople are compensated by their employers. The commission is usually based on a formula related to the salesperson’s productivity during a fixed period, such as a week, month, or quarter. Commissions are usually calculated as a percentage of total sales or the gross profit generated from sales and are paid pursuant to a written agreement or commission plan.
compa-ratio
defines the relationship between the salary received by an employee and the mid-point of the salary range for his or her job. To calculate the compa-ratio for an employee, divide the annual salary by the midpoint of the salary range for the position.
comparable worth theory
a theory of compensation that requires jobs of comparable economic value to the employer to be paid a comparable or equal salary. The theory is generally applied to issues of gender equality and the idea that jobs traditionally held by women are paid at lower rates than jobs that are traditionally held by men even when the jobs are of comparable worth to the company.
computer professional exemption
if an employee qualifies for the computer professional exemption under the Fair Labor Standards Act (FLSA) test, he or she is not covered by the minimum wage and overtime requirements. The computer professional exemption generally applies to computer systems analysts, programmers, software engineers, and workers in similar computer-related jobs, but does not include computer operators. Under this exemption, computer professionals must be paid an hourly rate of at least $27.63 or a salary of $455 per week.
Consumer Price Index (CPI)
a number that represents the change in the cost of living between two periods of time. The federal Bureau of Labor Statistics (BLS) collects and analyzes consumer price data monthly.
D
demographic profiles
a customized profile that provides a filter for viewing the salary data available on Compensation.BLR.com. Customers set up one or more demographic profiles specifying the industry, size of the company, and state, and local or metropolitan areas for which they want to view salary data for specific job titles. Generally, the demographic selections will correspond with the recruiting area so the company can benchmark its own compensation levels to those in the relevant market.
E
Employee Retirement Income Security Act (ERISA)
a federal law that regulates employee pension and benefit plans. ERISA was enacted to ensure that employees receive the pension and other benefits promised by their employers. ERISA also incorporates Internal Revenue Code (IRC) provisions designed to encourage employers to provide retirement and other benefits to their employees.
Equal Pay Act of 1963 (EPA)
prohibits gender-based differences in pay with the exception of a few limited circumstances. Virtually all employers in all industries are covered by the EPA, which codifies the concept that men and women should be paid equally for performing equal work.
essential functions
are duties that are basic or fundamental to a position. Under the Americans with Disabilities Act (ADA), reasonable accommodation must be made if such accommodation will enable a qualified individual with a disability to perform the essential functions of a position.
executive exemption
if an employee qualifies for the executive exemption under the Fair Labor Standards Act (FLSA) test, he or she is not covered by the minimum wage and overtime requirements. In determining whether the executive exemption applies, employers need to consider job duties and responsibilities, as well as the salary basis test.
exempt jobs
jobs that are not subject to the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). The FLSA sets out requirements for exempt jobs under the tests for the administrative, professional, executive, computer professional, and outside sales exemptions.
F
Fair Labor Standards Act (FLSA)
a federal law that sets the standards for wages and overtime pay that apply to most public and private employers. The FLSA requires employers to pay employees who are not otherwise exempt at least the federal minimum wage and overtime at 1.5 times the regular rate of pay for hours worked over 40 in a week. The FLSA also requires employers to maintain certain records and regulates child labor. Many states have their own laws that create additional requirements.
G
garnishment
an order from a court or judicial agency requiring an employer to withhold a certain sum from the wages of an employee for payment of a debt. For example, garnishments may be used by the Internal Revenue Service (IRS) to collect back taxes or issued by a court to collect child support.
government contractor
an employer that performs work pursuant to a contract with a federal, state, or local government agency.
H
Health Reimbursement Accounts (HRA)
are a new form of employer-provided medical coverage in which employers fund an account that employees may use to pay medical expenses up to a fixed amount per coverage period (usually a year). The account is generally coupled with a high deductible medical insurance plan.
Health Savings Accounts (HSA)
is another form of medical coverage in which employees and usually employers contribute to an account that employees may use to pay medical expenses. The account is generally coupled with a high deductible medical insurance plan. The HSA is portable, which means the account balance can continue to accumulate and can be transferred from one employer to the next. The funds remaining upon retirement are available to the employee in much the same way that 401 (k) funds are available.
I
independent contractor
a person who is hired to perform work for another person but is not that person’s employee or agent. Companies that hire independent contractors do not withhold or pay taxes on the monies paid to the contractor, and the contractor is not covered by workers’ compensation or unemployment insurance. Therefore, there are strict tests for who may be classified as a contractor rather than an employee.
indexing
the adjustment of employee compensation to account for inflation in the economy.
industry
BLR uses the Standard Industry Classification (SIC) for reporting data by industry. This is the system used by the federal government for classifying businesses and organizations by industry.
J
job family
BLR uses the Standard Occupation Classification (SOC) system for reporting jobs by job family. This is the system used by the federal government for grouping jobs together based on job duties, e.g., management occupations, accounting and finance, manufacturing.
job grades
are used to compare and rank jobs within an organization. Many employers use a system such as BLR’s nine-factor job evaluation tool to rank jobs based on skill, education, experience, and duties. Based on the factors assigned to the position, a job grade is assigned to the position.
M
manufacturing jobs
generally blue-collar jobs involving skilled and unskilled occupations, production work, and manual labor. Employees in these jobs are ‘non-exempt’ and covered by the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).
maximum rate
is the maximum of the salary range for a given job grade. The maximum is calculated as 125% of the midpoint for the job grade and is generally paid to those who have a great deal of experience on the job and are performing at an exceptional level.
mean
for purposes of employee compensation, the average of all salaries reported for a particular job.
median
for purposes of employee compensation, the value that represents the middle of a range of salaries for a particular job.
merit increase
is an annual salary increase awarded to employees based on their individual job performance. Employers generally set a merit increase budget each year. Employees with high levels of performance receive higher increases and those performing below expectations may receive no increase for the year.
midpoint
is the middle of the salary range for a given job grade. The midpoint of a salary range generally represents the salary at which an individual who is fully qualified for the position and performing all of the job functions at an acceptable level will be paid. Once the midpoint for a salary range is established, the minimum and maximum of the range are calculated.
minimum
is the minimum of the salary range for a given job grade. The minimum is calculated as 75% of the midpoint for the job grade and is generally paid to those who meet minimum qualifications but have less experience and require some training in order to perform the job.
N
nonexempt jobs
are subject to the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). Nonexempt jobs include clerical or office jobs, as well as non-management plant or manufacturing jobs.
O
office jobs
are generally white-collar and involve clerical work such as data entry, word processing, bookkeeping, etc. Employees in these jobs are ‘non-exempt’ and covered by the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).
outside sales personnel exemption
if an employee qualifies for the outside sales personnel exemption under the Fair Labor Standards Act (FLSA) test, he or she is not covered by the minimum wage and overtime requirements. In determining whether the outside sales personnel exemption applies, employers must consider whether the employee’s primary duty is sales and whether the employee works the majority of the time outside the office. There is no minimum salary requirement.
overtime
the Fair Labor Standards Act (FLSA) requires enterprises engaged in interstate or foreign commerce and state and local government to pay overtime of 1.5 times an employee's regular rate of pay for hours worked in excess of 40 hours in a workweek, unless the employee is considered exempt from overtime. Some states have additional overtime pay requirements.
P
paid time off
is also known as PTO. Instead of providing employees with a certain number of paid days off for vacation, sick time, and personal days, some employers combine all paid time off into one bank of days to be used for any purpose.
partial exemption
under the Fair Labor Standards Act (FLSA), in addition to the types of jobs that are exempt from both the minimum wage and overtime rules, there are some jobs that may qualify for an exemption from one or the other. For instance, there is an exemption to the overtime requirement for retail sales personnel, and certain exemptions to minimum wage requirements.
pay at-risk
refers to the portion of an employee’s total compensation package that is variable and based on company and individual performance. This is compared to a fixed annual salary that is paid regardless of overall performance as long as the employee remains employed by the organization.
pay grades
are synonymous with the phrase ‘job grades’. Pay grades are used by many employers to compare and rank jobs within the organization. Many employers use a system such as BLR’s nine-factor job evaluation tool to rank jobs based on skill, education, experience, and duties. Based on the factors, a pay or job grade is assigned that correlates to the salary range within which positions with that pay or job grade will be paid.
per diem
per day; an amount of money that is payable per day
percentile
the rate below which that percentage of the data fall. For example, data in the 75th percentile are at the rate below which 75% of the data fall.
piecework
a method of employee compensation in which the employee is paid for output (by the ‘piece’) rather than for time (by the hour). Employers must pay employees compensated based on piecework an amount equal to the minimum wage for all hours worked and 1.5 times the regular rate of pay for hours worked over 40 in a week.
prevailing wage
the wage, as determined by the government, that prevails among workers in a particular occupation and geographical area and that must be paid to workers in similar occupations on projects that are performed under government contracts.
primary contractor
is the individual, company, or other entity that has a direct contractual relationship with a government agency to provide services. The primary contractor is responsible for providing the service by itself or through a subcontractor arrangement.
professional exemption
if an employee qualifies for the professional exemption under the Fair Labor Standards Act (FLSA) test, he or she is not covered by the minimum wage and overtime requirements. In determining whether the professional exemption applies, employers need to consider job duties and responsibilities, as well as the salary basis test.
professional jobs
jobs that qualify for the professional exemption from the minimum wage and overtime rules. Professional occupations include such jobs as doctors, lawyers, teachers, and certified public accountants.
R
rate range
refers to the spread of salaries paid for jobs assigned to the same job grade. Salary survey data are collected for benchmark jobs within each job grade and used to establish the midpoint of the rate range for that job grade. The midpoint is the rate at which an employee who is fully qualified and performing the job at an acceptable level would be paid. The rate range for a job grade consists of a minimum, midpoint, and maximum rate of pay. The minimum is calculated at 75% of the midpoint and the maximum at 125% of the midpoint.
retail sales exemption
creates an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA) for employees who work for certain retail or service establishments and earn at least half of their compensation from commissions on the sales or goods or services, and have a regular rate of pay that is equal to at least 1.5 times the minimum wage.
S
salary basis test
to be exempt from the minimum wage and overtime requirements of the federal Fair Labor Standards Act (FLSA), employees must be paid on a salary basis. This means that, with few exceptions, exempt employees must be paid a predetermined amount each pay period regardless of the actual number of hours worked. Under the FLSA, exempt employees must be paid a weekly salary of no less than $455.
salary range
also known as a rate range, refers to the spread of salaries paid for jobs assigned to the same job grade. Salary survey data are collected for benchmark jobs within each job grade and used to establish the midpoint of the salary or rate range for that job grade. The midpoint is the rate at which an employee who is fully qualified and performing the job at an acceptable level would be paid. The salary or rate range for a job grade consists of a minimum, midpoint, and maximum rate of pay. The minimum is calculated at 75% of the midpoint and the maximum at 125% of the midpoint.
service jobs
are generally blue-collar jobs involving skilled and unskilled occupations, manual labor, and custodial operations. Employees in these jobs are ‘non-exempt’ and covered by the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).
severance pay
benefits or payments offered to an employee upon the termination of employment and generally in exchange for a release of any claims against the company. Severance may be offered when there is a layoff, plant closing, merger, to encourage employees to take early retirement, or to discourage a terminated employee from suing the employer.
subcontractor
an individual or company that takes on a portion of a government contract originally assigned to the primary contractor.
T
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