Compensation is entirely payments received by personnel in yield for their effort at the workplace. Such rewards can be attributed to either direct or indirect financial compensation as well as non-financial benefits. Total compensation in an organization is founded on diverse regulations both at the federal and at state level. The organization must observe existing legislation in areas of employment, remuneration equity, citizens’ rights employment, indemnity, social security, labor relations and job-related health and security. Such laws are also pertinent in shaping benefits plan and salaries of staffs as well as taxes paid on income which are normally based on rules produced from certain federal and state laws. The famous law that the civil service needs to observe is the labor standard act. This law is important and owners of industries should be acquainted with it. The labor standard laws deals with 5 major laws of compensation namely, strenuous allowance, the least wage level, records keeping responsibility and the child labor. It sets minimum wage for workers and what each of them should get paid. It came up with overtime for hours beyond 40 in a seven day period. It is important to note this law gave some guidelines on how much minors could get. (Milkovich, Newman, ; Milkovich, 2002)
Equal pay act of 1963 together with the fair labor standard act have some connections. The variance in the two laws comes when the fair labor standards restricts the difference in salaries given to male and female employees in the same position while Equal Pay Act does not restrict the system of seniority. Equal Pay Act does not attend to both exempt and non-exempt position of the members rather it recognizes values and rewards decent performance. Women originally got a raw deal in terms of payments whereby they were paid less compared to male counterparts for jobs with equal experience. The act made it fairer for both gender when it came to matters of compensation. The consumer protection act of 1968 is mostly concerned with the consumer acknowledgement such as wage garnishment, general commission on consumer finance, and extortion of credit transaction. Another important law is employee superannuation income security act which manages and categorizes the pension benefits, retirement plan, disability and health insurance packages. It offers occupation safety and parity in employment and Medicare (Robinson, Xue, ; Yu, (2011).
There are many factors to be considered especially when creating a compensation plan for a given company. Contracting employee working under federal government in a biotech industry demands different approach than hiring accounts clerk in an NGO. While some laws protect both employees working at different levels locally and federally, we find not all applies in every case. Under family and medical leave Act of 1993, only employers with over 50 employees or more were required to provide this package. Considering the two cases we find that not every individual working at the federal and another one working for local organization receive equal benefits. It is therefore not fair for workers to continue earning low income under extreme conditions and get less. The laws create a level ground for all players in the industry to work within the framework of laws and regulations without any party stepping on its mandate.
There are some similarities in total compensation between organization as well as differences in respect to exterior markets. Benefits are major part of employee compensation plan normally given in pecuniary terms to persuade, entice and keep staffs. Some non-monetary rewards such fringe benefits extended to employee do add value to them. Benefits are included in compensation package even though there are no such demands in the law to embrace them. Such benefits can take form of insurance, retirement plans, entertainment package and leaves. Some organization can also spread such benefits to the employees in form of day care. Both the federal and states laws have varied specter in respect to compensation where by state laws oversee and control compensation plans of workers, and the federal laws demand that employer contributes into social security (Milkovich, Newman, ; Milkovich, 2002).
However, compensation differs from one organization to the other considering the federal government and private sector organization case scenario. The two differ in other attributes such as motivation or effort that are not quantifiable but truly matters to persons. Differences in Total reward also varied according to the level of training of employee. This is demonstrated clearly where 36% higher total compensation to high school education working at the federal level compared to workers in private sector. Workers whose level of education concluded in a bachelor’s degree get an average of 15% higher total compensation than their private-sector colleagues (Perry, & Zenner, 2001). Generally, the federal government rewarded 16% extra in total benefits that it would have if average payment had been similar with that in informal sector, after taking into account definite visible characteristic of employees.