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 benefit. 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 standards, remuneration equity, citizens’ rights employment indemnity, social security, labor relations and job-related health and security. Such laws are also pertinent in shaping benefit plan and salaries of its staff 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, strenuously allowance, the least wage level, records keeping responsibility and the child labor

Equal pay act of 1963 together with the fair labor standard act have some correlations. The variances 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 pay attention to both exempt and non-exempt status of the employee rather it recognizes merit and rewards good performance. The consumer protection act of 1968 is mostly concerned with the consumer credit such as wage garnishment, national commission on consumer finance, and extortion of credit transaction. Another important law is employee retirement income security act which manages and organizes the pension benefits, retirement plan, disability and health insurance programs. It offers job security and equality in employment and Medicare.
There are some similarities in total compensation between organization as well as differences in respect to external markets. Benefits are significant part of employee compensation plan normally given in monetary terms to motivate, attract and retain employees. 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 include them. Such benefits can take form of insurance, retirement plans, entertainment package and leaves. Some organization can also extend 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 govern and control compensation plans of workers, and the federal law demands that employer contributes into social security.
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 measurable but really matters to individuals. Differences in Total compensation also varied according to the level of education of employee. This is illustrated clearly where 36% higher total compensation to high school education at the federal level compared to workers in private sector. Workers whose level of education culminated in a bachelor’s degree get an average of 15% higher total compensation than their private-sector counterparts.

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