Thanks for forwarding Mr. Stonefield phone message to us. We understand Mr. Stonefield likes get our recommendation for pay and benefits strategies. He also likes to have pay and benefits comparable to other limousine services in Austin, TX market. Additionally, he has mention that he plans to have 25 employees in first year. He is also projecting annual revenue for first year in red (-$50,000) but he is expecting revenue to grow at 5% rate over next couple years. We will explain different pay systems and different benefit packages and then give our recommendations. We have broken down our task in three different categories: Market Evaluation, Pay System and Benefit package. Market Evolution of Austin, TX:
We must understand local market situation before giving our recommendation. According to yellow pages, there are 116 Limousine Service Companies in Austin, TX. And according to United States Department of Labor, there are 1080 Taxi and Limousine drivers in Austin, TX. The average salary for a limousine driver in Austin, Texas, for 2013 was $22,570 or $10.85 per hour. The hourly median wage for a limousine driver in Austin, TX, was $9.79 per hour (“United States Department of Labor,” 2014).
Typically, the limousine company allocates 25% of its budget for drives salary and benefits. According to United States Department of Labor Business, the employment of taxi and chauffeurs is projected to grow 16% from 2012 to 2022. The growth in this industry is directly link to IT companies. According to Venturebeat, more IT companies are moving to Austin, CA because of low business tax and low cost of living. This is good for limousine service business. Compensation Structure:
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It was once said, "Those who do not study the past are deemed to repeat it." On the brink of the new 21 st century it is important for us at the Ford Motor Company to take a look at our past to see what has worked and what has not in order to set the standards for the automotive industry. It is also imperative to take a close look at what our competitors have done because we can also learn from ...
There are many compensation pay systems. We need to explain each pay system and give our recommendation. The traditional job-based pay system includes a written and up-to-date job description of each position that company has. This is an important tool in the design a pay system, it identifies important characteristics for each position so that each characteristic can be, defined, and weight with compensable factors (Cascio, 2013).
The market-based pay system uses direct market-pricing approach. This type of pay structure is good where direct matches can be found in the market. In competency-base pay system, workers are paid on the basis of their skills or depth of knowledge. This type of pay structure is good where higher degree (college degree) is required for a job.
The compensation structure should reflect the company business plan and goals by placing a priority on customer service, repeat business, new client referrals, and safety. The compensation strategy should include three key compensation points. These three points are experience level, position, and customer satisfaction. What the company can afford to pay and implementing programs to reward performance that align employee compensation with the success of the company should be the basis of the compensation structure (Cascio, 2013).
The compensation structure should keep fixed labor costs low and place emphasis on benefits, incentives, and merit based-pay. Providing a first-rate benefits package for employees can be very important part of the hiring process and retention of the employees especially for small businesses.
Our recommendation is to use hybrid pay system as follow. For the clerical job, use traditional job-based pay because each clerical job is different for different company. So the market base-pay system is not good for the clerical job but it is best for the limousine driver job. Since all limousine companies have same requirements for the drivers, we recommend market base-pay when selecting a pay structure for drivers. This method is best because it allows us to review surveys in the Austin area on what the business should be paying for salaries. Benchmarking can be used when comparing the pay scale to other limousine services. Therefore, we are using the relevant labor of Austin, Texas and not Houston which is many hours away. We are lucky enough that Austin does have its own airport which will be helpful in the business in obtaining clients.
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We also recommend a pay structure be put in place in supporting the business. This allows the business to put the various job titles into different pay grades and ranges. In addition, since Mr. Stonefield is projecting annual revenue for first year in red (-$50,000), we recommend he does not overpay the drivers but start base pay with $11 per hours with performance incentives. So every quarter, there is a chance for an employee to get bonus if company goals and individual performances are met. According to United States Department of Labor, there are 8% more drivers in Texas per employment. So, getting quality drives should not be a problem. We have mentioned it last time but we still need to remind Mr.Stonefield about Federal and State employment laws. Texas has adopted the federal minimum wage rate.
Effective July 24, 2009, the federal minimum wage is $7.25 per hour for non-exempt employees. An employer does not need to pay an employee who lives on the business premises for on-call time in addition to assigned working hours. This applies to all-sized businesses. Willful violators may be prosecuted criminally and fined up to $10,000. A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties of up to $1,100 per violation. We recommend, the organization pays an employee minimum of $7.25 to be compliance with State Minimum Wage Act. Benefit Structure:
In today market, not just base pay but, complete benefit package is very important to attract new employees and keep them. Managerial attitudes and organization ability to pay have a major impact on wage structure and levels (Cascio, 2013).
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The Health Insurance Crisis in America Health insurance comes as second nature to many of us. We grab that blue and white card and put it in our wallet behind old Irving fill-station receipts and forget about it until we are sick or injured. When this happens, there it is, cushioning our fall like the extra padding it provided to cushion our wallets. This is not the case with everyone, however. ...
The benefit package should be based of long term strategic business plan. Some benefits are required by Federal or State Laws whereas others are need to attract and to retain quality employees. The four major income-maintace laws are Social Security Act (1935), Federal Unemployment Tax Act (1935), Worker Compensation (State Laws), and Employee Retirement Income Security Act.
First, the social Security Act, it requires payroll tax of 5.65% for employees and 7.65% for employers on the first $106,800 in earnings (Cascio, 2013).
This wage base payroll taxes include 1.45% for Medicare. Second, the Federal Unemployment Tax Act, it requires payroll tax of tax of 6.2% for first $7000 of earnings paid by employer (Cascio, 2013).
Third, the Worker compensation state laws, it is very important for the organization. If an employee is injured on the job while being a service to you, this process is handled by workers compensation. Anytime an employee has a work related injury, they’re provided payments for lost wages, medical treatment and rehabilitation to name a few. During the time the employee not working, they cannot lose their job. If they are no longer able to perform the junction, the employee must be offered a position of a similar instance.
In the state of Texas, an employee can file workers compensation claim within one year of the injury or from the date the employee had known about the injury. The state also has workers compensation on occupational diseases. This is when a work related injury has damages to the body as the result of repetitive activities the employee did over the period of the job. Workers compensation is handled by the Texas Department of Insurance. Employers are required to notify the worker’s compensation insurance carrier no later than the eighth day after the notice of occupational disease or the employees first day of absence from work due to injury or death. Penalties maybe assessed if not complied or reimbursement of voluntary benefits even if a penalty is not assessed (“DWC Form-001,” 2014).
The state of Texas is one of the few states where workers compensation insurance is not mandatory. Obviously if an employee wants to take the business to civil court, then the business is taking a risk by not having insurance. There is another federal law that we need to consider and explain to Mr. Stonefield. It is called the affordable care act – aka ObamaCare. ObamaCare is the unofficial name for The Patient Protection and Affordable Care Act which was signed into law on March 23, 2010 and became law starting 1, January 2014. Obamacare’s health care reform does a number of important things including offering Americans a number of new benefits, rights, and protections in regards to their healthcare and setting up a Health Insurance Marketplace where Americans can purchase federally regulated and subsidized health insurance (Obamacarefacts, 2014).
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Studies show that at one period in time in February of 1992, 37 million Americans were without health care coverage. However, this study only included all people currently without insurance, that being their basis for believing that those people could not obtain health care of some sort. A more accurate figure to go on is 8 million Americans who are without health care capability, for three ...
There are plenty of important things for owners of smaller businesses to know about Obamacare. Texas business owners, who have between one and 49 employees, aren’t legally required to offer health insurance to their employees. The employers can purchase health insurance for your employees from the Small Business Health Options Program (SHOP).
If the employer uses SHOP, then the employer has to offer coverage to all of full-time employees. If employers have fewer than 25 employees and employer provide ObamaCare through the SHOP then it can qualify for the “small business health care tax credit.” The credit is available to businesses with employees whose average annual wages are less than about $50,000 (LegalConsumer, 2014).
We don’t recommend Mr.Stonefield to provide ObamaCare-Health care to his 25 employees and pay 50% for employee’s health insurance premiums. First year, he is just trying to establish business and does not have enough cash to provide additional benefits, more so his employee may qualify to get discounted health insurance because of low income compare to national average. We have given our recommendation based of information Mr.Stonefield provided to us and that are align with long term business strategy.
References
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Minwage.htm. Retrieved from http://www.dol.gov/compliance/guide/ Cascio, W. F. (2013).
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The Term Paper on Relationship Between Employees and Health Care Organizations
Analyze the factors affecting the relationship between employees and health care organizations to determine which single factor is the most significant. Explain your reasoning. The long-term economic success of healthcare organizations depends on the efforts of employees with the appropriate capabilities and motivation to perform their jobs well. Organizations that are successful over time have ...
Denver, CO: McGraw-Hill. DWC Form-001. (2014, January 2014).
Employer’s First Report of Injury or Illness Huls, J. (March 5, 2013).
why-austin-is-techs-new-destination-of-choice. Retrieved from http://venturebeat.com/ Solis, H., & Hall, K. (2010, May).
Austin-Round Rock-San Marcos, Tx. National Compensation Survey, September 2010. Workforce Commision, T. (April 03,2013).
currentWage. Retrieved from http://www.twc.state.tx.us/ui/lablaw/texas-minimum-wage-law.html
