HRM 7002 WEEK 2 ASSIGNMENT
Week 2
Financial and Legal Aspects and Regulations
Compensation and benefit packages are subject to more than organizational decision-making. Compensation plans are based on organizational finances, which are typically outside of the realm of human resources expertise and knowledge. It helps for human resource professionals to have a basic understanding of the financial aspects of an organization, so they have a better foundation on which to make their decisions since those decisions are often interrelated. To do this effectively, there should be an understanding of basic finance and accounting terms. Table 1 below includes some common financial terms which all human resource professionals should understand. It also helps to get to know a colleague within finance who can provide more detailed knowledge.
Table 1
Common Financial Terms for HR Professionals
Cost Expenses associated with daily maintenance and administration of a business
Expense Economic costs businesses incur through operations to earn revenue
Operating Expenses Expenses businesses incur through normal business operations
Capital Assets Any kind of property owned by the organization, tangible or intangible, such as buildings, office equipment (furniture and computers), and services, (Internet access and wi-fi systems for employees)
Capital Expenses Expenses related to newly purchased capital assets or investments that improve the useful life of an existing capital asset
Direct Labor Cost Wages for employees to produce a product, not wages paid for supportive roles such as maintaining equipment used in production
Indirect Labor Supportive labor, including employees who manage and maintain equipment
Understanding financial aspects are essential, but you must also understand legal aspects and regulations because pay practices must adhere to specific laws and regulations. This can be especially challenging for global organizations as most countries have an established wage and hour law to regulate how organizations are supposed to pay their employees, which may differ from that of the United States. Furthermore, in reviewing any compensation system, compliance is key and must be observed for each position. A question that may come up maybe compliance with a particular entity. For example, employee tax withholding is required by law for full-time and part-time W2 employees; and it must be reported to the IRS. Then, you have the Fair Standards Labor Act (FSLA), the Department of Labor, and local, state, and federal labor laws to consider. If any of these embodiments were to audit your company’s compensation system and discover a violation, the company could be subject to heavy penalties.
For example, the Fair Labor Standards Act (FLSA) guides the classification of positions, including identifying whether certain jobs are exempt or non-exempt. These classifications guide the organization for each position review, including salary range, hours worked, types of benefits, and perks. What is the starting point? The starting point consists of the framework of the job description, experience, Knowledge, Skills, and Abilities (KSAs), the responsibilities that the position includes, such as what the position will oversee, years of education, content creation, certification requirements, and more.
Similarly, payroll is a function by which employees receive their compensation. Payroll can be administered in one of three ways: internal, meaning the organization handles all payroll activities; external, where payroll is outsourced to an external vendor; and payroll processes, which can be a combination of both functions and viewed as a hybrid approach.
The human resource professional is responsible for being knowledgeable about applicable laws and regulations. In addition to an organization’s internal financial constraints, various laws and policies may affect how compensation is structured within an organization. The effect of performance and other external constraints will be discussed further in the next two lessons.
An organization also depends on the Human Resource Department to recognize and respond to any changes in the laws. In addition, Human Resources maintains all applicable records and submits all reports as required by law. You will have the opportunity to illustrate this newfound knowledge by preparing an infographic to help communicate these essential laws and regulations.
Weekly Resources and Assignments
Review the resources from the Course Resources link, located in the top navigation bar, to prepare for this week’s assignments. The resources may include textbook reading assignments, journal articles, websites, links to tools or software, videos, handouts, rubrics, etc.
Week 2 Resources
• The WorldatWork Handbook of Compensation, Benefits & Total Rewards: A Comprehensive Guide for HR Professionals
WorldatWork. (2007). The WorldatWork handbook of compensation, benefits & total rewards: A comprehensive guide for HR professionals. Wiley. ISBN: 978-0470085806
Read Chapter 7: Regulatory Environment: The FLSA and Other Laws that Affect Compensation Practices.
• Chapter 2: The Law and Compensation and Benefits
Atchison, T. J., Belcher, D. W., & Thomsen, D. J. (n.d.). Chapter 2: The law and compensation and benefits. Economic Research Institute.
• Human Resources: When HR and Payroll Clash
Human resources: When HR and payroll clash. (2018, May 30). Credit Union Times, 29(19), 1, 16.
• Wage and Hour Class Actions Can Cost Employers Millions
Nagele-Piazza, L. (2018, February,5). Wage and hour class actions can cost employers millions. SHRM.
• Understanding the Complexity of Employment Law and Worker Rights
Nugent Guignon, A. (2020, January). Understanding the complexity of employment law and worker rights. RDH, 18–25.
• Summary of the Major Laws of the Department of Labor
Summary of the major laws of the department of labor. (n.d.). U.S. Department of Labor.
This site provides an overview of the major laws under the Department of Labor and is a good resource for human resource professionals to keep. For the purposes of this course, pay attention to the laws regarding Wage and Hours, Employee Benefit Security, and the Family and Medical Leave Act.
• How to Make an Infographic in 5 Steps
Nediger, M. (2019, January 30). How to make an infographic in 5 steps [Step-by-step guide]. Venngage.
Week 2 – Assignment: Explain the Impact of Legal Regulations on HR Budgets and Compensation for Various Work Groups
This week, you learned about the various legal regulations that affect how organizations can compensate employees and provide benefits, some of which are mandated by law. Your assignment for this week is to consider all of these regulations and develop an infographic. Your infographic will depict the laws and regulations that must be considered when developing a compensation plan.
Your infographic will be used to help train and onboard new HR team members. It will be displayed in the HR office for all HR team members to reference quickly. The infographic should identify each key law, provide a brief description of its purpose, the impact the law has on organizational and HR budgets, and indicate which employee group or groups are affected.
You may use PowerPoint or another program with which you are familiar to create your infographic.
Length: One infographic that meets the above criteria.
References: Include a minimum of 3 scholarly or professional references.
The completed assignment should address all of the assignment requirements, exhibit evidence of concept knowledge, and demonstrate thoughtful consideration of the content presented in the course. The writing should integrate scholarly resources, reflect academic expectations and current APA standards.
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