The organization must under legal obligation provide certain benefits to each employee. These basic benefits are:
Social Security and Medicare
Retirement, disability and survivor benefits. To be eligible it is necessary to work 10 years or forty quarters with minimum earnings of $630 per quarter. Payment at age 65 or reduced payment at age 62. The employees contribute with the 7.65 percent of earnings to Social Security Fund and the company match the amount. Of this tax 6.2 percent is allocated to the retirement program of the Fund up to the income ceiling of $68400. Any income over that limit is not subject of the tax. On the 1.45 percent of Medicare tax there is no ceiling. The future of Social Security is uncertain. Now the Social Security is enjoying a surplus, with more money coming in from payroll taxes than is going out to beneficiaries. But this surplus will be drawn down as baby boomers retire. The crisis is expected to begin in 2015. By 2037 the system will be insolvent and will have only enough money to pay 70 percent of current benefits. Republicans and Democrats have two different visions of Social Security. Republicans with Bush would let individuals invest portion of payroll taxes and the Democrats are defendants of current program.
This program was established in 1935 as a part of Social Security Act. Unemployment compensation is paid by employers to the government, which uses the money to provide income continuation during periods of involuntary unemployment. In recent years the employers paid tax of 6.2 percent of the first $7000 of each employee's annual earnings. The proportion paid to the state is 5.2 percent and 0.8 percent is paid to the federal government. The cost to employers is experience rated. The more the organization lays off the employees the higher the rate. That could be good reason for companies to hire contingent workers in flush times. Compensation to the workers is provided for limited period of 26 weeks, but can be extended under certain circumstances to another 26 weeks.
This is an insurance program, which provides payment to workers and their families for death or permanent disability that occurred at the workplace regardless of whether the employer or employee was negligent. This program pays medical bills and income replacement. To calculate the disability payments most states use a formula of two thirds of the average weekly wage. Depending on the state, the company contributes to the state fund, a private insurance or a mixture of both. Total cost pays organization. It is experience rated and the rates are based on likelihood of accident, type of industry and the company's history of accidents. Hence good workplace and health practices pay off.
Family and Medical Leave Act (FMLA, 1993)
The last legally required benefit is the Family and Medical Leave Act, Under this Act the companies with 50 or more employees are obligated to give the employees the opportunity to take to twelve weeks of unpaid leave each year for family or medical reasons, such as care for newborn or adapted child (for both parents), for health care of a family member and in case of serious health condition of workers. Under FMLA the employer must maintain the employee's health coverage and guarantee to employees upon return their current job or one equal to it.
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