Business Terms: Other Compensation

by on March 7th, 2015
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The US Department of Labor describes “other compensation benefits” as medical reimbursement, educational assistance, and nonproduction cash bonuses. This type of compensation is something that is generally agreed upon between the employee and the employer.

Because of the competitive nature of finding and retaining the best employees for employers, those seeking out these employees often have to offer other compensation benefits to employees. This manner of compensation is not addressed by the Fair Labor Standards Act (FLSA). Both parties generally agree on benefits at the time of hiring, but can be added anytime. This type of compensation generally needs to be included as part of the employees regular rate of pay, it has to be shown on an employee’s pay statement, and need to be taken into account when computing an employee’s overtime. There are some exceptions to this reporting as defined by the FLSA . The full FLSA may be read here.

Suggested Meta Description: Compensation added to employee pay rate. Other compensation includes medical and education reimbursement and cash bonuses.

New Businesses Finding Top Talent with Other Compensation

Even during economic duress there is still a competition between the top employers for the best employees. Often though it’s the up and coming employers who have the most potential and may be appealing to the top talent. However these newer employers with revolutionary ideas don’t always have the ability to pay their employees the most money right away. For these companies there are other means of offering added compensation.

Other compensation could be any type of non-salary compensation that could further sweeten an employee’s prospects for joining a newer company. These benefits could include nonproduction cash bonuses which the employee could be granted once certain thresholds are met. Something like this could be beneficial for both an employee who has potential and could really shine in a post when given the opportunity. Other compensation benefits also could benefit the employer who could make a name for themselves and expand their brand through the acquisition and retention of this employee.

This type of compensation doesn’t need to be for new companies or even for younger employees though. This compensation metric can include some kind of an educational assistance from a larger company who sees potential and would like to see an employee grow beneath its wing. Entering into an educational assistance-exchange with an employee is something of a mini-contract; the employer is betting that this employees productivity will grow with the furthering of their education. The employee will hopefully see the benefit of being aided in their education and will want to at least stay with this employer through the terms of whatever the agreement has been.

Medical assistance is one type of other compensation which larger companies may be able to offer employees who would benefit from this. An employee who has some dire medical needs could benefit greatly from such an agreement.

The needs for every company and every employee are vastly different. But if typical compensation packages are not enough to sweeten the prospects for an employee to come join a company, other compensation can often tip the scales and seal a quasi-employment contract between the two parties.
Sources:

http://www.dol.gov/dol/topic/benefits-other/othercompbenefits.htm
http://www.dol.gov/compliance/laws/comp-flsa.htm


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