labor relations class exam via blackboard
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ch._8.pptxSupplemental benefits
Pensions/Retirement Plans
Vacation/Holidays
Health Care
Insurance
Other Benefits
Health Care, Dental, Vision
Life Insurance, AD&D, STD/LTD
Others – bereavement, jury duty, rest and lunch breaks, legal assistance, day care, health club reimbursement, birthday off
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pensions
Inland Steel Case – must bargain
Defined benefit v. defined contribution
Contributory v. noncontributory
Funded v. non-funded
Vesting
Inland Steel – Supreme Court ruled in 1949 that employers cannot refuse to bargain with unions over pensions.
Contract will set age where employee can retire and received (full or reduced) pension benefits as well as the years of service required.
Defined benefit – employer risk, defined contribution – employee risk
Non-contributory - (employer funds all), contributory – 401Ks (tax-deferred plans) – employer often “matches” funds, employee immediately vested in own contribution. Employer sometimes offers higher match to 401ks for concessions in other areas.
Funded pensions are guaranteed because the funds are isolated from other company money.
Unfunded pension payments are dependent upon the employer’s willingness and ability to pay.
Vesting – ownership in funds.
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Pension legislation
ERISA – Employee Retirement and Income Security Act – 1974
Stemmed misuse of funds
Created PBGC
Pension Protection Act of 2006
Rules and requirements for employer pension plans
Further secured pension rights
ERISA passed because companies had misused or abused pension funds or could not fund them as promised, also some laid off or fired employees immediately prior to becoming pension eligible.
Rules:
Employees must be 100% vested under 5 or 7 year plan.
All new pension plans must be fully funded.
Fiduciary responsibilities added to pension plan administrator.
Annual reporting and disclosure requirements.
Employees have right to receive annual information on vesting and benefit status.
Established PBGC – guarantees pension up to a maximum if employer goes out of business or doesn’t have funds.
PPA:
Employers who have underfunded plans must pay additional premiums.
Closed loopholes that allow underfunded plans to skip pension payments.
Employers must put aside 100% of cost of future pensions.
Employers terminating their pension plan must provide additional funding for pension insurance system.
Outlines specific rules companies must follow to maintain pension obligations.
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Other benefits
Paid Vacation
Holidays
Health and Welfare Insurance
Severance Pay
Reporting Pay
Supplemental Unemployment
Paid vacation less than 70 years, grew in wartime when vacations & holidays given in lieu of wage increases because of wage controls.
-Employers agree helps with motivation and productivity.
-Paid straight time unless negotiated differently
-Agreement will spell out how to pay when employee works
-Vacation buy-back
-Once earned, vacation cannot be taken away – must pay if employee leaves company
Holidays – US average 12, up to 45 in other countries
-usually 1.5 or 2X pay if work on a holiday.
-many companies provide “floating holidays”
Health & Welfare – growth spurred by IRS when it allowed employers to deduct as a business expense
-group insurance plans make much more affordable
-Employers and unions started working together in 1980s when prices soared to educate employees and provide options that lower costs (HMOs, PPOs)
-Health, prescription, dental, vision, life, spouse/family life, AD&D, STD/LTD, nursing home, critical illness, mental health, retiree plans
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Other benefits
Severance Pay
Reporting Pay
Supplemental Unemployment Insurance
Severance pay is specified in contract, usually 1 week per year of service
Reporting Pay/Call-In Pay – must be negotiated – many have minimum of 2 hours, most pay 4 hours.
Supplemental Unemployment – additional pay to unemployment insurance paid by state. Some unions have required this as a concession to less job security.
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Issues to consider
Increase in Grievances
Automatic Cost Increases
Employee Participation
Cost Prohibitive
Entitlement
The growth of benefits packages increases the number of issues that could be grieved, and the total number of grievances.
Benefits costs automatically rise with wage increases, as many benefits are based on the employee’s pay.
Now that employees are more informed and asked to make decisions, they expect to be consulted on changes to benefits packages.
Employers must do more with less workers because the high cost of benefits limits the number of workers they can hire. This has increased the use of overtime, temporary employees and outsourcing.
Benefits become an entitlement, and are more likely to have a negative effect on morale than be a motivator. They are almost impossible to take away once provided.
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