MEMORANDUM
To: Forward Style Inc. Management Team
From: Jennifer Winter, Human Resource Management
Subject: Evaluation of Rewards Program
Date: August 27, 2010

Forward Style Inc. is a marketing company with 65 employees. The following memo provides an evaluation of the organization’s current rewards program. Some benefits are mandated by law. Other benefits, although not mandated by law, are subject to government regulations. The evaluation addresses legal requirements and how the offered rewards affect the organization’s ability to retract and retain key employees.
Social Insurance
Social Security benefits, mandated by law, are financed by both the employer and employee. Employer’s payroll tax equals 6.2% and employees’ equals 4.2% through 2012 (IRS, 2012). The maximum taxable earnings amount is $110,100. The Medicare tax rate is 1.45% for both employers and employees. There is no limitation for taxable earnings on Medicare taxes. Because mandated by law, Forward Style Inc. does not have influence in design of this benefit.
Unemployment Insurance also mandated by law is financed by federal and state taxes on employers. The Federal Unemployment Tax (FUTA) rate for 2012 is 6% on the first $7,000 of each employee’s wages. Employers may claim a credit against their FUTA tax for contributions paid under state statutes, up to 5.4% of wages paid. New Mexico’s wages subject to tax is up to $22,400. The minimum rate is 0.05% to 5.4% in 2012 (Tax Policy Center, 2012). Employers are advised of the contribution rate in March of each year. Forward Style Inc. can keep its experience level low by avoiding unnecessary workforce reductions, keeping contributions to a minimum.
Worker’s compensation insurance is a policy employers must purchase if they have three or more employees. New Mexico worker’s compensation is privatized, so Forward Style Inc. can