Legally Required Benefits and Discretionary Benefits
Legally required benefits are mandated by the following laws: the Social Security Act of 1935, various state workers’ compensation laws, and the Family and Medical Leave Act of 1993. All provide protection programs to employees and their dependents.
The Social Security Act of 1935
The economic devastation of the Great Depression era prompted the federal government into action, because most people used up their life savings to survive and opportunities for gainful employment were scarce. The Social Security Act of 1935 set up two programs: a federal system of income benefits for retired workers and a system of unemployment ...view middle of the document...
The Family and Medical Leave Act of 1993
The Family and Medical Leave Act (FMLA) provide job protection to employees in cases of a family or medical emergency. FMLA permits eligible employees to take up to 12 workweeks of unpaid leave during any 12-month period. These employees retain the right to return to the position they left when the leave began or to an equivalent position with the same terms of employment, including pay and benefits. The passage of the FMLA reflects growing recognition that the parents of many employees are becoming elderly, rendering them susceptible to a serious illness or medical condition. The passage of the FMLA also recognizes the increasing prevalence of two-income families and the changing role of men regarding child care (Martocchio, 2010).
Discretionary benefits, on the other hand, are voluntary benefits and hence, are not mandated. This kind of benefit encompasses health care, life insurance, retirement plans, Employee Stock Option Plans, Supplemental Unemployment Benefits, premium pay, part-time employee benefits, distinctive benefits, etc. Companies can choose to offer a wide variety of benefits to employees. Discretionary benefits fulfill several roles. The first, protection programs, most closely parallels legally required benefits by offering protections to employees and family members due to income loss or ill health. The second, paid time-off, affords employees time off with pay for many purposes, including illness or to celebrate designated holidays.
Income Protection Programs
Disability insurance replaces income for employees who become unable to work on a regular basis because of an illness or injury. Employer-sponsored disability insurance is more encompassing than workers’ compensation because these benefits generally apply to work- and nonwork related illness or injury.
Employer-sponsored life insurance protects family members by paying a specified amount to an employee’s beneficiaries upon the employee’s death. Most policies pay some multiple of the employee’s salary for instance, benefits paid at twice the employee’s annual salary. Employees usually have the option of purchasing additional coverage. Frequently, employer-sponsored life insurance plans also include accidental death and dismemberment claims, which pay additional benefits if death was the result of an accident or if the insured incurs accidental loss of a limb.
Sometimes referred to as pension plans; provide income to individuals and beneficiaries throughout their retirement. Individuals may participate in more than one pension plan simultaneously. Companies may establish their retirement plans as defined contribution plans, defined benefit plans, or hybrid plans that combine features of defined contribution and defined benefit plans. Under a defined contribution plan, employers and employees make annual contributions to...