This paper examines the multifaceted relationship between technological advancement and human resources compensation and benefits processing. It outlines the core components of employee compensation and benefits packages, analyzes the impact of two major federal employment laws — the Federal Employees' Compensation Act and the Fair Labor Standards Act — and compares self-funded insurance with commercial fee-for-service plans. The paper also identifies legally required benefits such as Social Security, Medicare, and workers' compensation, and presents strategies HR managers can use to minimize associated costs, including leveraging benefits technology, promoting workplace wellness programs, and selecting industry-specific benefit packages.
Advancement in technology has been of significant benefit for compensation and benefits processing. In particular, benefits administration has been drastically transformed owing to the internet, and the kinds of benefits desired have also changed in recent years. Today, the administration of benefits is increasingly a self-service undertaking conducted through an organization's website or intranet. As a result, personnel are now able to go online to update their contact information, select desired options, and make changes as required.
This shift has considerable consequences for freeing up HR employees — and, to a lesser extent, organizational managers — to focus on more important activities. Technology enables greater flexibility in compensation and benefits plans and places more of the responsibility for selection in the hands of employees. In addition, technology has provided employees with greater access to pertinent information regarding compensation and benefits. For instance, employees can visit websites such as Salary.com to benchmark their organization's offerings against others in the market (Ensher et al., 2003).
Employee benefits are optional, non-wage forms of compensation provided to employees in addition to their normal wages or salaries. The components of employee benefits may include group insurance — encompassing health, dental, and vision coverage — disability income protection, retirement benefits, sick leave, vacation time, education funding, and flexible or alternative work schedules (HR Council, 2017).
An example of direct compensation is an annual wage along with healthcare coverage. Government-mandated benefits include Medicare. An example of a retirement benefit is an employee pension plan, while examples of non-retirement discretionary benefits include vacation time and sick leave.
Two major pieces of federal employment legislation have a significant impact on how organizations structure their compensation and benefits packages. The first is the Federal Employees' Compensation Act (FECA), which mandates that organizations compensate for the disability or death of federal employees resulting from personal injuries sustained in the course of employment.
The second is the Fair Labor Standards Act (FLSA). Its impact on compensation and benefits is that employers are required to pay covered, non-exempt employees at least the federal minimum wage and to provide overtime pay where applicable (U.S. Department of Labor, n.d.).
"Trade-offs between self-insured and fully insured health plans"
"Mandatory benefits and strategies to reduce HR costs"
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