The True Cost of Employees

Dear Anita,

My wife and I have a mom-and-pop shop with a dozen employees. One of my workers acts like I’m being a cheapskate with his salary, hinting he deserves a big year-end bonus. I try to pay a competitive wage, but I have to make a profit, too. How can I communicate the economics of a small business?

Dear, Pops,

Total_Compensation_Statement

Payscale’s Total Compensation Statement shows the employer’s contribution in addition to the wages.

Employees often think that their salary is the only cost to the employer for their services. They often do not realize that taxes, workers’ compensation insurance and even the cost of “Mom” completing the paperwork can cost your business another 30 percent in payroll costs.

I assume that you have done salary comparisons for the job title in your geographic region to ensure that you are, indeed, paying a living wage that rivals your local competitors. If you are, a little education may illuminate the realities of employer-paid contributions to all of your employees.

“Total Compensation Statements” can include line items such as:

  • Base pay
  • Bonuses
  • Vacation/PTO/sick days and other paid leave
  • Payroll taxes (Social Security match, Medicare, state unemployment insurance tax)
  • Employer-paid portions of insurance plan premiums (health, dental, vision, life, disability
  • Employer contributions to employee’s retirement plan, such as a 401(k) or pension
  • Stock options or profit sharing
  • Annual usage value of a company car
  • Value of any other fringe benefits offered, such as:
    • Fitness club membership
    • Cell phone service
    • On-site child care
    • Free or discounted public transportation or parking
    • Tuition assistance/professional development
    • Company discounts

Non-quantifiable perks may include flex time or on-site facilities available for employee use. For new hires, include one-time benefits, such as relocation expenses or signing bonuses. There are handy Total Compensation Calculators online.

While a Total Compensation Statement can illustrate the true cost employers pay for an employee, it has the potential to backfire as a teaching tool. Workers may feel you are fudging the numbers if you “double-count” vacation or PTO and they don’t really receive additional pay. Also, if an employee does not use a perk, such as child care, then the value is moot for them. A pitfall with salaried employees may occur if they feel any overtime is not valued since it won’t be reflected in the compensation.

Employees who may be shocked to learn that their $40K annual salary is actually costing their bosses around $52,000 may be a little more grateful, or at least have a greater understanding of the realities their employers face.

Readers: Have Total Compensation Reports opened your eyes to the true costs your employer faces?

Do you have a job-related question? Ask Anita.

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Rich Retirement

Hello Anita,

My new job has given me the opportunity to invest in their 401k, but I know little to nothing about the benefits. How does this really profit me, and is it worth the decrease in my monthly income? If I switch to a new job, what are my options with this 401k? I would like to know all of the reasons this investment would help or hinder me.

Dear, Planning for the Future,

First, congratulations on finding a job that truly cares about your future, as not every company offers this luxury. It is essential to prepare for retirement, no matter how far away it may seem. Many of us spend most of our life longing for the day when we no longer have to wake up at 6 am for yet another 8 hours in the office. However, once you retire, you will no longer have the steady income you have been used to for the past 30-plus years. You must start planning early in order to ensure that your finances after retirement do not mirror that of the penniless college student, and what better way to do this than with a 401(k)?

A 401(k) is an employer-provided retirement plan through which you deduct a portion of your paycheck into an investment account and, in many cases, your employer contributes as well. Below are a few ways this plan can better prepare you for the retirement you’ve always dreamed of:

  • Many employers match your contribution, putting their own money into your investment account. Typically, they will invest 50 cents for each dollar you put in, usually topping out at 6 percent of your overall income. Essentially, this is free money you really didn’t have to work for! Of course there is a catch: most companies will only match contributions if you input enough money of your own. There is also often a “vesting period,” requiring you to work a certain amount of time, typically 3 to 5 years, before you can keep your employer’s investment. Should you decide to leave your employer prior to fulfilling the vesting period, all or a portion of their contribution will be deducted from your account value. Companies vary in these requirements, so contact your Human Resources department for their specific prerequisites.
  • A 401(k) is a great way to reduce your taxable income. The money contributed to your 401(k) is untaxed, which lowers your overall income. Although at first this seems detrimental, a lower income potentially means a lower tax bracket, so you could end up paying fewer taxes to Uncle Sam. For example, if you typically receive $2,000 per paycheck and you put $100 dollars into your 401(k), you will only pay taxes on $1,900. Yet once again, there is a catch: the government charges a 10 percent early withdrawal penalty if you take any money out of your 401(k) account before the age of 59 ½, so try and wait until then. Even after 59 ½, they require you to pay taxes to retrieve your money, but at a smaller tax rate due to your lower income. Just don’t pull all of your money out at once, because what you take determines your “salary” and, consequently, your tax bracket.
  • 401kjpgThrough the years, your 401(k) builds continuously with compounding interest. In the beginning, you earn interest solely on your original investment, but afterward, you also earn interest on that interest. Although this amount may seem insignificant, over the years, it can grow exponentially. For example, if you invest $100 with an annual 10 percent interest rate, you’ll have $110 after one year. The next year, you earn interest on the $110, giving you $121 after Year 2. This keeps quickly growing and in the long run can mean big bucks. Now add the interest from your employer’s matching contribution, and your 401(k) could be rolling in the dough! Use this 401(k) calculator to determine how much your investment would return after a certain amount of time.
  • Your retirement plan is not necessarily lost when switching jobs. If your new employer has a 401(k), you can transfer the plan, but make sure the rollover checks are made out to your new plan administrator and not yourself; otherwise you may be susceptible to tax penalties. If your new employer does not have a 401(k), or has a waiting period for eligibility, most previous employers allow you to leave the money in their plan as long as you have a minimum $5,000  investment. If none of these options are available, you may open a rollover IRA at any bank or financial institution, allowing you to invest your funds in any stock or mutual fund. When thinking about leaving your job, take these options into consideration and contact your current and potential employer’s Human Resources department to arrange for your 401(k).

The money you put in your 401(k), and your employer’s matching contributions, can add up quickly. With the compounding interest gained from these investments, your retirement plan can grow exponentially. As long as you don’t take out money before the age limit, or all at once, your 401(k) can set you up for a fabulous future: one without an 8 to 5 job where you can still live life comfortably. So utilize this benefit wisely, and enjoy the after-retirement explorations and vacations that your planning has awarded you!

Keeping saving!

Anita

Thank You for the Interview

A reader writes…

Hi, Anita:

I was fortunate enough to land an interview at a manufacturing plant close to where I live. I am very excited about the possible opportunity to gain employment with this company and want to leave them with a lasting impression. What can I do post-interview to continue to spark their interest?

Dear, Eager to Please:

Congratulations on your interview. Getting your foot in the door and meeting face-to-face with the hiring manager is a huge leap toward gaining employment. Now that you have aced the interview, it is time to seal the deal with a little something extra: a great “thank you” note.

Thank you notes are a great way to show how much you value the interviewer’s time and appreciate their interest in you. It also lets them know that you are serious about wanting to be their next stellar employee. In my personal opinion, thank you notes are a requirement after every interview. Follow these simple steps, and take five minutes out of your day to help land the job you desire!Thank you

  • Ask for a business card from the hiring manager before you leave the interview. You should always do this at the end of the interview to make sure you have the correct contact information and address.
  • Select a professional stationery or card on which to write your “thank you” message. Avoid unprofessional imagery or loudly designed cards. Some hiring managers may prefer email communication. In this instance, it may be appropriate to send an email. If you are unsure on which method is best, do both. Send an email and mail a hand-written letter.
  • Address the interviewer using Mr., Mrs., or Ms. For example, if you are interviewed by John Employer you would write Mr. Employer. It is best to be too formal than too familiar.
  • If you are sending a card, address the envelope and write the card by hand. This makes the card more personal and shows that you took extra time to write it just for them (not mass-produced).
  • Choose a message that resonates with the hiring manager and include some information from your interview. Below are two examples that you can use as a guide.
    • Dear, Mr. Employer: Thank you for taking the time to discuss the (Job Title) opportunity with me on (Date). I believe my previous experience and skill set make me an excellent candidate to join your team, especially since you mentioned that (Issue) was a challenge you wanted to tackle. It was truly a pleasure to meet with you, and I look forward to hearing from you. Best regards,
      (Your Name)
    • Dear, Mr. Employer: Thank you for meeting with me to discuss the (Job Title) opportunity at (Company Name). Your insights and additional information about (Job Responsibilities) were very helpful and helped solidify my belief that I am the perfect candidate for the position. I look forward to hearing from you soon, and thank you again for this opportunity. Sincerely,
      (Your Name)
  • Send the thank you card as soon as possible, ideally within 24 hours of the interview. You can either send the card in the mail or hand-deliver it to the reception desk where you interviewed.

To bring these tips together, take a few moments to view this video:

This small acknowledgement will take you very far in the interview process. It will help the hiring manager remember you and serve as a reminder to your professionalism.

Readers: What have you done in the past to make an impression on a potential employer?

Best of luck,

Anita

Have a question you would like to ask? Visit http://anitaclew.com/ask-anita/.

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In Case of Family Emergencies…

Hi, Anita:

My mother has recently become very ill and is soon going to be requiring full-time care. Are there any protections for me so I do not lose my job over this family emergency?

Dear, Fear of Being Fired:

Thank you for the question. Caring for a sick family member or parent can be a very challenging and time-consuming ordeal. Luckily, there are some protections and support for you in case an emergency strikes — namely, the Family and Medical Leave Act (FMLA).

Family_Emergencies_MWUnder FMLA, companies that have over 50 employees within 75 miles from the company are required to offer 12 weeks of job-protected unpaid leave to take care of a spouse, parent, or child with a serious health condition. It also covers the birth and care of an employee’s child or that employee’s adoption or foster care of a child.

In order for an employee to qualify, he/she must meet the following criteria:

  • Employee must be employed by the company for over 1 year.
  • At least 1,250 hours must have been worked in the last 12 months.

For those that may have a more complicated situation and need to care for someone who is not a legal or biological relation, you will need to prove that the person needing your care is in loco parentis with you. You might be asking yourself, what in the world is in loco parentis? According to the U.S. Wage and Hour Division Fact Sheet #28C, in loco parentis refers to a relationship in which a person has put himself/herself in the situation of a parent by assuming responsibility for a child to whom they are not legally or biologically connected. In other words, the person who needs your care is not your biological or legal parent but took care of you as if he/she was.Wheelchair

To prove your situation qualifies as in loco parentis, be prepared to provide the following information:

  • How old was the employee when in loco parentis care began?
  • How dependent was the employee on the person during childhood?
  • What was the extent to which duties commonly associated with parenthood was provided?
  • Did the person provide the employee with day-to-day responsibilities of care or financially supported them as a child?

I hope this helps shine some positive light on your situation and that it will help lessen your job-security concerns. As always, in these situations, consult your Human Resources representative to make sure you are all on the same page and to keep them informed on your situation. The more you know and can prepare, the better off you will be.

Readers, have you ever been in a similar situation? What recommendations do you have for Fear of Being Fired?

Here are some additional resources that are worth reading if you are faced with this situation:

And here is a quick video that spells out who is eligible for FMLA rights:

Have a question you would like to ask? Comment below or visit http://anitaclew.com/ask-anita/.

Warm Wishes,

Anita

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Achieving the Annual Raise

Hi, Anita:

I am just about to hit my second year mark with my employer and I think I deserve a pay raise. I have performed exceptionally well and taken on other roles and responsibilities in my department. How would you suggest that I go about asking for a pay raise at my annual review?

Dear, Ready for a Raise:

Congratulations on your two-year anniversary! From the sound of things, your employer is probably very happy to have brought you on board. Now that you have shined in your current role and offered to assist in different capacities, you most certainly should open the floor up for salary negotiations. As the old sayings go, “it doesn’t hurt to ask” and “you never know you can’t until you try.”  Here are some things to keep in mind when asking for a raise.

  • Make sure your timing is right. It is typically appropriate to ask for a raise after you have been at the company for at least a year. If you ask before this time, it may be premature and come off as pushy.
  • Show your commitment to your job and the company day in and day out. Your manager will be impressed by your tenacity and loyalty to the team. This means… Show up on time each day. Don’t sneak an extra 15 minutes into your lunch hour. Don’t spend your time on Facebook or texting with your girlfriend during the work day. Don’t make jokes about how much you’d rather be in bed than at work. Even if you only do these things every now and then, your manager will notice and take it as a lack of commitment.
  • Bring a list of projects or activities in which you had significant involvement to present to your manager. You want to show how valuable you are to your team and why you should be receiving increased compensation for your efforts.
  • Similarly, bring a list of goals that you have accomplished and a list of those you wish to achieve in the future with the company.
  • Do your research beforehand by looking at comparable positions in your area on sites like Payscale. You will go in knowing whether or not you are being low-balled or asking for far too much compensation.
  • Come to your raise discussion with a goal salary in mind. If you have a number in your head, you will be more confident and set on achieving that rate.
  • Be direct with your raise request. Do not beg for a raise or ask your manager if you deserve one. Be confident and proud of your accomplishments that have spurred you toward having this discussion.

These points will help you get off to a great start during your pay negotiations. With concrete proof of performance and confidence, a raise is more likely to come your way.

Check out this clip for a few tips on getting the raise you want:

Readers, what tactics have you used to ask for a raise? How nervous were you to bring up the subject on a scale from 1-10 (10 being “pulling your hair out” nervous)?

Have a question you would like to ask? Visit http://anitaclew.com/ask-anita/.

Warm Wishes,

Anita

Validation for Veterans

A reader writes:

Good Morning, Anita,

Recently, I returned home from a deployment to Afghanistan. Since coming home and taking a much-needed break, I feel that I am ready to join the civilian workforce and begin supporting my family again. Like many other veterans, I am running into some difficulty finding gainful employment and paying the bills. What advice can you give to me and other veterans looking for employment and experiencing the hardships of transition? Thank you!

Dear, Valued Veteran:

First and foremost, thank you for your service to our country and for the sacrifices you have made in the name of freedom. I can speak for many reading this blog that we greatly appreciate your efforts and dedication to the United States of America.

Unfortunately, as you mentioned, transitioning into the civilian workforce and regular life after serving in the armed forces can be difficult. Not only do you face the same challenges as those currently unemployed, but you must also Army_Bootsacclimate to new surroundings and hone your military training to fit open employment opportunities.

To get the ball rolling, make sure that you register with Veteran Affairs (VA) as soon as possible after you are discharged. You should qualify for medical and dental insurance. These benefits will diminish your financial burden significantly if unexpected medical emergencies arise. Co-pays for preventative medicine and routine exams are relatively low for this program and maybe expunged if you are unable to afford them.

Next, I suggest that you take some time to sit down and write a strong and compelling résumé and cover letter describing your skills, experiences, and work ethic. These items are job hunting gold and are necessary in landing your next career. For tips and advice on how to create and perfect these documents, take a quick look my posts How to Tailor Your Résumé and Covering the Cover Letter. If you feel like you need additional help, you can look into services such as CareerPerfect  to write your résumé and cover letter for a nominal fee. The VA’s Vocational Rehabilitation & Employment Program also has services that can help.

Some strong qualities and experience to highlight are:

  • Military efficiency
  • Overseas experience
  • Problem solving skills
  • Flexibility and decision-making abilities under pressure
  • Leadership roles
  • Other relevant experiences

Also, take your military occupation code (MOS), area of concentration (AOC), Air Force specialty code (AFSC), or Navy Soldier_Saluteenlisted classification (NEC) and enter them into a skills translator, like those found at www.vetsuccess.gov/military_skills_translators, to turn them into commonly desired skills in the private sector.

Now that you have a strong and noteworthy résumé and cover letter, head on over to my friends at Select Staffing for employment assistance. Visit their website (www.selectstaffing.com), fill out the online application, and call your local office to schedule an appointment with a recruiter. Select Staffing is actively seeking skilled, dedicated, and versatile veterans for a wide variety of positions. They highly value the characteristics, commitment, and skills possessed by servicemen and women and are determined to do their part to help.

I know that they are currently recruiting for the following positions:

  • General Professional
  • Security Services
  • Administrative Assistant
  • Legal Assistant/Paralegal
  • Accounting
  • Data Entry Operator
  • IT Auditors
  • Utility Workers
  • Project Managers
  • Business Intelligence Analysts
  • And much more!

If you are looking to sharpen your skills and become educated in your field of interest, sign up for the GI Bill. Once you have done so, get in contact with Veteran Affairs Education and apply for benefits online to help cover tuition, books, and living expenses while you are in school. I strongly encourage you to take advantage of this benefit as you will strengthen your résumé and have better chances of landing a lucrative career.

I found a great webinar that I think would be great for all veterans to watch, titled “Job Search Tips: Webinar for Military Veterans Transition to Civilian Careers” by Lida Citroën. It is a bit longer than my typical videos but worth the time.

Readers, what advice do you have for our recently-returned Veterans?

Veterans, what have you found to be the most helpful with you return to the civilian workforce?

Money for Mileage

A reader writes…

Hi Anita,

I have recently been promoted at my job and the new position requires that I spend quite a bit of time on the road. I need some help understanding the proper procedures and in-and-outs of mileage reimbursements and hoping you can help. Thanks, Anita!

Dear On-the-Move,

What great news! I love hearing about success stories. Congratulations on the promotion. Many companies have moved away from providing company cars to their traveling employees due to budget cuts and insurance/liability issues. More often than not, employees are asked to use their personal vehicles for on-the-job transportation and in return receive monetary compensation per mile driven or are given a car allowance for renting vehicles.

Each company has the choice to reimburse mileage expenses. There is currently no government mandate that requires what a company reimburses employees per mile. The reimbursement is not only intended to cover the cost of fuel, but also
wear and tear on your vehicle, tires, or engine parts. As a general standard, the Internal Revenue Services has issued a guideline payment for the following businesses:

  • 55.5 cents per mile for business miles driven
  • 23 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The next question I often get is where to start calculating the miles driven. I always start from the location of your office. This would exclude any mileage driven on a typical work day to and from your job. If, for example, you are scheduled to travel on a sales call that is 30 miles away from your home but 25 from your office, you will clock the distance traveled from work to the final destination and back. On the other hand, if the site is 5 miles from your house and 35 from your work then you will still start at the office. It is a general rule of thumb that I follow personally.Money for Mileage

To make sure you have enough money set aside for maintenance and unexpected automotive expenses, I would deposit the money that you receive from your company into a savings account. Let’s say it is $4.00 a gallon for gasoline and your car gets 20 miles to the gallon on average. This means roughly you will be spending about 20 cents per mile on fuel, leaving you 35.5 cents to cover maintenance costs for your vehicle (assuming your company follows the IRS standard).  Do yourself a big favor and put about 70% of your reimbursement into savings. Trust me, you will be thankful you have it someday.

I know we are all trying to save some money at the pump these days. I found a great video with some tips to improving your gas mileage and keeping more money in your pockets. See below!

What are your thoughts on personal vehicle use for business purposes? What are the policies of the companies you work for?

Have a question you would like to ask? Visit http://anitaclew.com/ask-anita/.

Looking forward to your input,
Anita

Understanding Unemployment

A reader writes…

Dear Anita,

I was recently laid off from my position as an Accounts Payable Clerk and my severance package is just about to run out. I was offered 2 months’ pay after the layoff, and I have been living off that while looking for a job. Unfortunately, I have not been able to find gainful employment and now will be filing for unemployment. How do I go about filing for and obtaining unemployment benefits?

Dear, Moving Forward,

Thank you for the great question. It can be a difficult time maneuvering your way through a layoff and coming to terms with what your future may look like. After you have exhausted your severance package or if you were not presented with a package, you may feel like you are up the creek without a paddle. Try your best

to remain calm. You do have the option to receive unemployment for up to 99 weeks if necessary.

Every state has a different process and procedure as to how you go about obtaining these benefits. Most states allow you to file a claim right from your own home or wherever you have access to the internet by completing an online application. If you do not have this type of access, you will want to visit the state’s unemployment office or see if you can file over the phone.

Be prepared with specific information that may be asked by your state’s representative. Each state varies on their requirements, but a few pieces of key information are listed below.Discouraged_Job Seeker

  • Your name
  • Your address
  • Telephone number
  • Former employer’s name
  • Former employer’s address
  • Former employer’s telephone number
  • Employer’s Federal Identification Number. (located on your pay stub)
  • Your Social Security Number
  • Your Alien Registration card number (if you are not a U.S. citizen)
  • Employment start and end dates
  • Compensation amounts, typically just your wages
  • Grounds of your release or termination of employment

After you have submitted the initial application and are approved, you will be given the option to reapply for aid each week. Funds are typically paid to your bank account, via check, or sent to a debit card.  Select whichever method of payment fits your situation the best.  If you choose direct deposit to your bank account, be sure to submit a voided check to verify your routing and checking account numbers.

Job HuntingMore details and information about filing for unemployment in your state can be found visiting your state government’s unemployment office.

My final piece of advice is to not stop your job search! As a matter of fact, some states won’t continue sending you checks unless you prove you have applied to jobs each week. I will be writing an article soon on what you should do while you are unemployed to increase your chances of landing a great job. Stay tuned for this post. In the meantime, I have a quick video I’d like to share with you that synopsizes this post.

Readers! Have you had to file for unemployment benefits? Share with me your experience and how you are overcoming adversity.

Thanks and I look forward to your comments!

-Anita

Maternity Leave… What do you think?

Hey working (and expecting) moms out there!

I thought you would find the following article about maternity leave interesting: http://tradepost.selectfamily.com/index.cfm/2011/11/17/maternityleave

As an American, (despite the difficult times we face), I firmly believe we live in the best country in the world.  As a working mother of two, however… I think our nation’s rules and regulations regarding maternity leave stink!  

What do you think?
Anita

Disclaimer

Anita Clew's blog posts are intended for general guidance and should never be taken as legal advice. In all instances where harassment, inequity, or unfair treatment is believed to be present, please consult your HR Department or legal representation.
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