Compensation and Benefits

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While in many career agencies compensation and benefits are subjects of collective bargaining, it is helpful for you to understand these concepts as human resource management issues. This portion of the module provides an overview of the business concerns of managers who negotiate, plan, and administer salary, benefits, and fringe benefits programs for emergency service personnel.

Definitions

Let's begin by looking at some key definitions. While fairly standard definitions exist, we are using the definitions that come to us from Mondy and Noe (2005).
Compensation refers to any type of reward the person receives as a result of his/her performance. It may be salary, it may be educational benefits, or it may be non-monetary in nature.

Direct financial compensation is the pay that an individual receives in the form of wages, salaries, bonuses, etc.

Indirect financial compensation includes all monetary benefits other than those that are not included in direct compensation (i.e., pay).

Examples would be benefits (health, dental, vision insurance, and leave among others).

Non-financial compensation is compensation in the form of non monetary rewards. It might include the personal satisfaction derived from the job, the social/emotional climate, and/or the physical environments in which one works.

Competent supervision is often cited as exemplary of non-financial compensation along with an overall favorable quality of work life.

As alluded to as an example of indirect financial compensation, benefits are those financial rewards employees generally receive indirectly and include such things as health insurance, employer retirement contributions, annual leave, sick leave, and other benefits which translate into dollars.

Relevant Legislation Regarding Financial Compensation

There are also a number of pieces of legislation impacting compensation and benefits. A brief overview and summary of the key pieces follow.

Davis-Bacon Act (1934)

This was the first national law to deal with minimum wages. It specifically required federal construction contractors with projects in excess of $2000 to pay the prevailing wages in the area. The Secretary of Labor is authorized to make this determination, which usually parallels the average local Union rate.

Walsh-Healy Act (1936)

The Walsh-Healy Act also dealt with minimum wage issues. Those companies with federal supply contracts exceeding $10,000 are required to pay prevailing wages. The act also specifically required overtime pay (in excess of 8 hours per day or 40 hours per week) to be paid at time and one half.

Fair Labor Standards Act (1938) and As Amended

The Fair Labor Standards Act is likely to be the most significant legislation regarding compensation. It establishes: minimum wage, over time pay, child labor oversight, and record keeping. Administered by the Wage and Hour Division of the Department of Labor, it covers most organizations and employees (even some exempt employees are covered).

The original act has undergone several changes and modifications through amendments and it continues to generate discussion. Some of that discussion deals with the need for yet more revisions. We will be mentioning this one again along with the Equal Pay Act.

Equal Pay Act (1963)

This act was actually introduced as an amendment to FLSA. The Equal Pay Act prohibits employers from paying one gender less than the other gender if both employees do work that is the same or substantially the same. Generally speaking, jobs are substantially the same if they require equal skill, effort, and responsibility and are performed under similar working conditions.

References

Mondy, W. & Noe, R. Human Resource Management. 9th Edition. Upper Saddle River: Pearson, 2005.

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