Final answer:
Employers must track employee's insurable earnings and hours for fulfilling obligations towards worker's compensation, retirement, and insurance benefits, and for maintaining an implicit contract that provides a stable financial work environment for employees.
Step-by-step explanation:
Employers are required to track employee's insurable earnings and hours by pay period to manage financial responsibilities related to employee insurance, retirement plans, Social Security, unemployment, worker's compensation insurance, Medicare, and other benefits. These measures ensure that total compensation is accurately calculated and that funds for these purposes are appropriately allocated. This system provides a form of protection to workers, guaranteeing them compensation in the event of an injury on the job or a downturn in the economy that might affect their earnings. Additionally, employers contribute to workman's compensation insurance, which is a mandated insurance program that offers benefits to employees who suffer work-related injuries or illnesses. This obligation is typically regulated at the state level and represented as a percentage of the employee's salary. Understanding and managing these financial allocations are crucial for both compliance with legal requirements and for maintaining a trustworthy relationship with employees. It also aligns with the implicit contract between employers and employees, where there is an expectation that wages will not drastically decrease during economic downturns and not unreasonably increase during robust economic times.