Page 644 - Business Principles and Management

Chapter 23 • Managing Human Resources

life, contributions are made by both the employer and
employee. The Social Security Administration keeps
track of the contributions. Upon retirement, the per-
son can begin to receive payments from the account.
The amount of the monthly benefit depends on the
earnings record and the age at which benefits begin. Social Security contributions are made by
A worker who becomes totally disabled, regardless employees and employers each pay period.
of his or her age, can also receive benefits under the Although you can see the amount deducted
Social Security law. There are also provisions for pay- from your paycheck and the total amount con-
ments to survivors after the death of a person who tributed each pay period, it is difficult to realize
has made contributions. the amount of benefits you will receive upon
Medicare provides supplemental health insurance retirement. The Social Security Administration
for retirement-age people as well as others with spec- has developed a simple calculator that anyone
ified disabilities. There are three parts to Medicare can use to estimate the amount of benefits they
coverage—hospital insurance, medical insurance, will receive based on the wages they earn, the
and prescription drug coverage. The required contri- number of years they plan to work, and the age
bution rates for Social Security in effect as of 2005 at which they plan to retire. Point your browser
are 6.20 percent for employers and employees for all to www.thomsonedu.com/school/bpmxtra. Open
earnings up to $90,000. In addition, a Medicare con- the Quick Calculator and experiment by input-
tribution of 1.45 percent of all earnings is required ing different estimates of income and retire-
by the employer and employee. People who are self- ment options to see the impact on potential
employed must pay a total combined rate of 15.30 retirement payments. What factors other than
percent for Social Security and Medicare. income and retirement age may affect the
benefits you receive?

WORKERS’ COMPENSATION AND www.thomsonedu.com/school/bpmxtra
UNEMPLOYMENT INSURANCE
All states have workers’ compensation laws. Workers’ compensation requires
employers to provide insurance for the death, injury, or illness of employees that
result from their work. Some states maintain the insurance programs, but many
offer coverage through private insurance companies. Unemployment insurance
is a state-managed program that provides temporary income to individuals who
have been laid off from their jobs. Specific requirements must be met in terms of
the length of employment and steps taken to regain employment. Employers make
contributions to the state unemployment fund based on the number of employees
and their employment history.

FAMILY AND MEDICAL LEAVE ACT

The Family and Medical Leave Act (FMLA) requires that employers covered by
the law must allow an eligible employee up to a total of 12 weeks of leave dur-
ing a year for one of the following reasons:
• the birth, adoption, or foster-care placement of a child of the employee
• caring for an immediate family member (spouse, child, or parent) with a
serious health condition
• medical leave for a serious health condition

CHECKPOINT
What employment laws are administered by states rather than
the federal government?

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