Components of Compensation
The basic compensation that an employee receives
Base Pay
The lowest wage permitted by law
Minimum wage
Incumbent who is paid above the range set for a job
Red-Circled employees
Consistent payments made each period regardless of the number of hours worked
Salary
Applies when an employee works more than 40 hours in a workweek.
Overtime
Incumbent who is paid below the range set for a job.
Green-circled employees
Elements of compensation that cannot be as easily measured or quantified.
Intangible rewards
This act prohibits companies from using different wage scales for men and women performing substantially the same jobs.
Equal pay act of 1963
Groupings of individual jobs that have approximately the same value to the organization
Pay Grades
A tangible indirect reward given to an employee or group of employees as part of membership in the organization, regardless of performance
Benefit
The primary federal law affecting compensation
Fair labor standards act
Grouping jobs into pay grades based on similar market survey amounts
Market banding
Compensation linked directly to individual, team, or organizational performance
Variable pay
An hourly wage determined by a formula that considers the rate paid for a job by a majority of the employers in the appropriate geographic area.
Prevailing wage
Practice of using fewer pay grades with much broader ranges than in traditional compensation systems
Broadbanding