Leaders Manage Compensation Programs

Flashcards covering restaurant compensation management, including labor laws, payroll procedures, and performance appraisals based on the Hospitality and Restaurant Management 3rd Edition.

What are the three major components of compensation?

Wages, salaries, and benefits.

What is the definition of compensation?

All financial (money) and nonfinancial (nonmoney) payments and rewards given to employees in return for the work they do.

What are the two components of Prime Cost?

Labor cost and product purchases.

What is the difference between wages and salaries?

Wages are paid based on hours worked per day, while salaries are paid per week or month regardless of hours worked and are exempt from overtime.

What does the Fair Labor Standards Act (FLSA) establish?

Minimum wage, overtime pay, record-keeping, and child labor standards.

What is the rule if federal and state minimum wage rates vary?

Employees are entitled to the higher benefit.

What does the Equal Pay Act, administered by the EEOC, require?

Equal pay for equal work for jobs that are substantially equal, covering all forms of pay including salary, overtime, and benefits.

What is the purpose of Workers' Compensation?

To provide assistance to employees injured or disabled on the job, covering both wages and medical bills.

How is Unemployment Compensation funded?

It is paid by employers into a fund based on both Federal and State laws.

What is a Collective Bargaining Agreement (CBA)?

A legally binding contract between managers and employees represented by a union that covers employment conditions, pay, and dispute resolution procedures.

What four factors are considered in merit pay decisions?

Job performance (based on standards), accomplishments (outside work team), current pay rate, and contributions to business goals.

What is the Cost of Living index?

An index developed by the US Bureau of Labor Statistics that reflects changes in the price of food, housing, transport, etc.

What is the Peter Principle?

A warning against promoting employees into roles they may not desire or be suited for, which can lead to frustration and failure.

What are the first three steps in the typical compensation control process?

1. Monitor factors to keep up to date on compensation issues; 2. Analyze factors affecting compensation; 3. Establish standards and procedures based on analysis.

What is the definition of 'gross pay'?

An employee's total pay before any deductions.

How does Human Capital Management (HCM) software enhance payroll processing?

By integrating payroll functions, benefits tracking, and employee information into a centralized, automated system that reduces errors and ensures compliance.

What is a 'ghost employee'?

A person who is on the payroll but does not actually work for the operation.

What is 'garnishment'?

A legal procedure regarding an employee's compensation.

What does the US Bureau of Labor Statistics develop to reflect changes in expenses like food and housing?

The Cost of Living index.

Who is responsible for paying into the Unemployment Compensation fund?

The employers.

According to the FLSA, which employees are exempt from overtime pay?

Employees who receive salaries.

What are 'controllable costs' in a restaurant operation?

Labor costs (salaries/wages, tips, bonuses, merit pay, and commissions).