Pecos Valley SteakHouse Case Questions

Benefits! !
Many of the fringe benefits we have in today’s organizations are a result of the wage systems established in the United States during World War II. At that time wages were tightly controlled to help with the overall war effort. Companies were able to grant benefits in lieu of wages. After the war, these benefits were continued through the collective bargaining process and became “norms” for all companies.!

Today, we have two broad categories of benefits - mandatory and discretionary. The mandatory benefits are established by legislative action - Social Security,
Unemployment Compensation, Workers’ Compensation, and Family and Medical Leave. Discretionary benefits are established by the individual company. Over time the competitive forces have created a system where many of the discretionary benefits are considered the “norm” by employees.!

Discretionary benefits may be funded solely by the employer. These benefits are considered non-contributory since the employee does not contribute or pay a portion of
the cost. Discretionary benefits may be funded through employee contributions to pay the benefit costs. These contributory plans may range from 100% employee
contribution to a near zero percentage. A company may use a contributory plan for one benefits and a non-contributory plan for other benefits.!
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You need to recommend a discretionary benefit system for Pecos Valley SteakHouse. This recommendation should consider: !
! 1. Benefit Eligibility!
! a. Which employees are eligible for benefits?!
! b. When do employees become eligible for benefits?!
! 2. Funding: Identify which plans are contributory and non-contributory. If a benefit is non-contributory, then describe the contribution rates by the employer and the
employee.!
! 3. Paid Time Off Benefits - Identify the paid time off plans offered by the company. Be sure to identify the details on how many days an employee is eligible for paid
time off. For example, Vacations - 2 weeks after 1 year of service.!
! 4. Retirement Plans!
! a. Will the company offer a defined benefit or a defined contribution plan?!
! b. What is the rationale fo this recommendation?!