# MARKET ANALYSIS: MEDIAN OR MEAN

Median and mean are useful measures of distribution that identify central values and tendencies of a data set.  In a WageWatch compensation survey, median is the middle wage in a set of ranked market wages which separates the data set in half. When an even number of wages are ranked, with no true middle value, the average of the two middle data points is the median wage. Median is also called the 50th percentile.

The arithmetic mean which is also called the simple average or mean is one of the most commonly used statistics in business. One of the reasons is that it is very easy to calculate. It is the sum of all values of a data set divided by the number of values in that set.

In a normal distribution of data, the median and mean wages will be within a few cents of each other. When the mean is greater than the median, this indicates the data set is skewed towards higher wages. Similarly, when the mean is less than the median, this indicates the data set is skewed towards lower wages. Skewing typically occurs for one of two reasons: either the data set is not normally distributed, or the mean is affected by outliers or errors in the data set. The first situation is not uncommon and occurs when there is wage compression or the data is bimodal, meaning that the job description may be too broad and need to be bifurcated into two job titles. The second reason for the mean and the median being significantly different, due to an outlier or data error, is much more of a concern

Here is an example of how data affects the median and mean differently when an outlier is added to the data set.

Data Set A:  \$9.25, \$10.11, \$10.56, \$11.98, \$12.50, \$12.88;                  Median \$11.27,  Mean \$11.21

Data Set B:  \$9.25, \$10.11, \$10.56, \$11.98, \$12.05, \$12.31, \$125.00;   Median \$11.98, Mean \$27.32

In this example, it is clear that once the \$125.00 value is added as an outlier, the median wage becomes the better indication of the central value. Comparing the median with the mean from Set B tells us that while the middle wage or median is \$11.98, there appear to be employers paying at the top of the market, skewing the mean up sharply. The only way to know for certain if the difference between the median and mean is accurate or due to an error is a more thorough analysis of the data. If more data analysis is not possible, then the median is your better statistic to use.

Posted in Uncategorized on October 1st, 2014 · Comments Off on MARKET ANALYSIS: MEDIAN OR MEAN

# DO YOU PAY EQUITABLY AND FAIRLY ENOUGH TO SATISFY EEOC?

You may think you are paying your employees fairly and equitably until the EEOC comes knocking at your door to perform an audit.  It is commonly known that EEOC requires that all employees are treated fairly regardless of national origin, race, religion, color, sex (including pregnancy and sexual orientation), disability or genetic information. And for employers with 20 or more employees, the Age Discrimination in Employment Act requires that you treat workers over 40 the same and younger workers.  To be in complete compliance with EEO regulations, none of these factors can be used when you are hiring, promoting, disciplining and laying off workers.  Additionally private employers with at least 15 employees who work for you for 20 weeks or more a year must also comply with Title VII of the Civil Rights Act and if you have a federal contract or subcontract you may be subject to EEO guidelines.  Less commonly known is that fair treatment must also be extended to employees who marry someone of a different national origin, race, religion or color.  What you don’t know can hurt you and therefore periodic pay equity self-audits are essential.

All forms of pay are covered by these regulations, for example; base salary, overtime pay, shift differentials, discretionary or non-discretionary bonuses, stock options, profit sharing plans, life insurance, vacation and holiday pay, travel expenses, and benefits.  If an inequality in wages between men and women is found, it cannot be corrected by reducing the wages of either sex.

To properly analyze your pay practices, you need to identify all factors that influence all types of compensation.  Influencing factors may include:

Company Seniority

• Length of time in position
• Service interruptions
• Skills and experience required for the job
• Education, certifications, licenses, etc required for the job
• Performance ratings
• Historic pay increases
• Market Location
• Employment status such as Full-time/Part-time

Pay equity analysis should be performed that includes analysis by job group or salary grade;  if no formal salary structure is in place, group by jobs with similar value and worth.  Also analyze by race and by gender.  Ensure all your pay decisions are well documented as well as having good document retention policies in place.  Of utmost importance is that you apply your compensation practices in a consistent manner and in accordance with your policies and procedures.  If audited by the EEOC, you may need to defend your pay decisions and consistency and documentation will be crucial.

To protect your organization as well as ensure fair and equitable pay to all employees, it is essential to understand and stay up to date with all the regulations, ensure policies and procedures are in place for compliance and to perform periodic compliance audits.  Even if you are in compliance today, that can easily and quickly change as your organization changes and evolves.  Mergers, acquisitions and divestitures can significantly impact pay equity as well as the day to day business operations of hiring, terminating, promoting, transferring, and restructuring within the organization including the realignment of job duties.

Posted in Uncategorized on September 24th, 2014 · Comments Off on DO YOU PAY EQUITABLY AND FAIRLY ENOUGH TO SATISFY EEOC?

# EFFECTIVE NEW HIRE ORIENTATION

An employee’s experience during their first few days will affect the rest of their tenure. It is critical to begin with an effective, positive and fun new hire orientation for the future success of your new employees.  Even before an employee’s hire date, you can make a positive impact with a call to the employee two or three days before their start date, welcoming them, letting them know what time to arrive and what they can expect during their first day and first week on the job.  Studies show that a well-planned orientation can contribute to length of employment, better work attitudes, more effective communication and fewer mistakes.  Your new hire orientation is your chance to set a positive tone for a hopefully long lasting and mutually beneficial relationship.

A new hire’s early experience is highly influenced by his peers, managers, subordinates, HR team members and the organization’s top management.  Ensure that new hires are welcomed by their team members.  Plan a welcome breakfast meet and greet for their first morning on the job.  The new hire’s immediate supervisor should schedule daily meetings with the new employee at least for the first week, then at least weekly for the first month or two.  Schedule informational meetings with key people in the department and in other departments to provide the new hire with the general knowledge that they will need to perform their job.  Include an office tour in the orientation process that includes introductions.  Be sure to include introductions to top Executives, Human Resource personnel as well as receptionists, administrative assistants and copy/mail room attendants.

An effective orientation program will put emphasis on the new employee, their individuality and what they have to offer rather than focusing solely on the company’s culture and how the new employee can fit in.  You are probably hiring in part to get new ideas into the organization.  Make sure to capitalize on that.  Make your orientation meetings fun and be sure to provide a meal or at least snacks.  Keep it interesting and not too long. Too much information will be boring and will not be retained.  Orientation should reflect culture through interactive activities.  One way to make it memorable is to present companies goals, mission and values in an activity form rather than simply providing the information.  Allow the new hires to get to know each other on a personal basis, not just professional – go around the room and have them tell one professional and one personal thing about themselves.  You can also turn this into a game by writing one thing about each person on a piece of paper.  At the end, state items one at a time out of order and have people guess who said what.

Promote communication with a team building activity such as learning the employee handbook through a scavenger hunt.  For example, divide the orientation group into teams and see which team can answer the most handbook questions in a set amount of time.  Cover company ethics to let them know what is expected, and also include ‘unwritten rules’.  Don’t end there.  After orientation, provide follow-ups with each new hire to illicit their feedback and answer any follow-up questions they may have.

Don’t forget the basics.  Provide them with all the office supplies they will need to start their job, include contact information they will need.  And let them know how to get additional office supplies.  Teach them how to use the phone, how to forward calls, set up and change voice mail, and how to do a conference call.

Today, many companies are adding programs such as flex-time, telecommuting as well as accommodating and encouraging alternative work styles in an effort to provide a work environment where employees are happier and thriving.  Therefore don’t neglect or underestimate how impactful beginnings are, and provide your new hires with an orientation program that is effective and unique to your company and culture.

Implementing the above suggestions will help your company to build a culture that encourages retention of employees, which in turn will attract top talent. In addition to providing a great work environment that respects employees and provides opportunities for learning and growth, it is also important that they receive a solid compensation and benefits package.  At WageWatch we offer accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on September 17th, 2014 · Comments Off on EFFECTIVE NEW HIRE ORIENTATION

# HUMAN RESOURCES ROLE IN MERGERS AND ACQUISITIONS

Mergers and acquisitions are extremely challenging and even chaotic events.    Therefore, it is critical that everyone involved has a clear understanding of their role in the process. Mergers and acquisitions have become the norm in the business world and are often necessary for survival.  Almost every major company in the US today has or will experience a major acquisition.  There is a subtle yet distinct difference between a merger and an acquisition.  A merger is when two separate companies merge into one new entity.  An acquisition is when one company buys the assets of another company.  A merger or acquisition can be desired due to many different strategic reasons including positioning in the market, acquiring another company’s areas of strength or expertise, acquiring capital, diversification and short term growth.  There are several phases or steps in the acquisition process and human resources will typically be involved in at least 2 to 3 of these phases including the due diligence and investigation process and the post-merger integration process.

The human resource role in the due diligence and investigation process is to perform a thorough review of all human resource contracts, benefit plans, plan documents, systems, personnel, employment records, all forms of compensation, policies and procedures especially related to human resource regulations that relate to all human resource disciplines including compensation, benefits, recruiting, employee relations, training and development and payroll and HRIS.  Human Resources will also help to determine the organizational structure and staffing models for the new organization.  Some other important items that fall under the Human Resources umbrella are wage and hour or other compliance claims, employment litigations, collective bargaining agreements, any FMLA, OSHA, Workers Compensation, EEOC and OFCCP compliance issues.

Transition issues need to be discovered and addressed, for example pay levels between the two organizations may be very different and a cost analysis may be needed to determine the cost of bringing pay levels more in line between the two merging entities.  Other transition issues that often need addressed are transitioning pay increase and performance review cycles, differences between benefit levels in health care and retirement plans.  Most items will need to be addressed immediately, and some items can be completed during the first or second year following the merger or acquisition.  For example if the acquisition occurs in the first quarter and your merit increases are done in January, you may be able to wait until the following January for this transition.  Conversely, it will be highly desirable to transition the acquired entity employees immediately to your health and welfare plans rather than take on the administrative burden and ownership risk of additional plans.

Human Resources is also responsible for layoffs, stay bonuses, culture differences and synergies and will play a key role in the orientation and welcoming of the new employees.  These are just a few key items on the Human Resources Acquisition Checklist.  And each item has its own list of key points and issues that must be addressed.  While most of the transition work will happen prior to the closing date, the job of transitioning employees into your policies, pay models, practices, procedures and culture does not end at transition date and typically continues for 2 to 3 years following the transition date and requires continued review at the management level.

Change can be challenging and demanding.  With over 5,000 properties in our lodging compensation database, 150 casinos, and 125 hospitals and clinics, we regularly see properties being acquired, divested, and rebranded. Consolidations are occurring at a rapid pace in the healthcare industry as well with hospitals buying physician groups and primary care practices. There are numerous human resources concerns to address every time a property changes hands. WageWatch consultants can guide you through the process of integrating two or more compensation models, rebalancing grades and ranges, examining internal equities between plan documents, developing a market based approach to resolve inconsistencies, and helping you along the way with all your transition needs.  For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on September 10th, 2014 · Comments Off on HUMAN RESOURCES ROLE IN MERGERS AND ACQUISITIONS

# ARE YOU ATTRACTING TOP TALENT?

Many business owners find it to be a huge challenge to attract and retain a group of talented and hardworking employees that are loyal to the company and its mission. Finding high caliber employees with advanced skills to complete important jobs within a company is a challenge that not only exists in today’s marketplace, but one that business owners have had to navigate for years. Everyone is looking for top talent, and those companies that excel in attracting and retaining this talent are the ones that will reap the rewards. In addition to a number of other factors, businesses that best retain employees offer great compensation and benefits packages through data from 2013 healthcare compensation surveys, 2013 casino compensation surveys or compensation surveys for another specific industry.

To retain talent, it is essential that loyalty is established. In order to do this, the employee must feel that their job is instrumental in achieving the goals of the company, making them excited to come into work each day and give it their all. It is also important that the work the employee puts in is acknowledged, affirming their place within the company, and offering them opportunities for growth.

While compensation and benefits packages are one of the largest factors considered by employees, it isn’t enough to make top talent to stay. The following are a few ways that you can attract and retain the best employees at your company:

• Promote open communication. When a company is completely open with employees, everyone will feel respected. Instead of allowing rumors to spread, let your employees know as soon as possible about anything that is going on in regards to the company. When possible, let your employees be a part of the decision making process. A culture of open communication is very attractive to employees.
• Provide opportunities for team building. Most employees enjoy interacting with their coworkers. By encouraging team work, employees are able to build great working relationships and establish a trusting, open environment for the company. When working together toward a common goal, employees are more motivated and excited about their jobs, often producing excellent results.
• Cater to individual work style. Each employee has a different way that they prefer to work, learn and be managed. When you as an employer take the time and effort to make adjustments for each employee’s needs, they will respect the company more and loyalty will, once again, be built. This will also help you to establish teams that will work best together based on their work styles.
• Acknowledge your talent. When an employee does a good job, it is important that you recognize them for their efforts, so they feel that they are a valued member of the team. A majority of employees leaving a company do so because they feel unappreciated. Employees want to feel that the work they are doing is making a difference, so acknowledging their work often is essential. Also, review surveys for 2013 healthcare compensation, 2013 casino compensation and other market compensation data surveys for your industry to determine what benefits and bonuses you should be rewarding your employees with.

Implementing the above suggestions will help your company to build a culture that encourages retention of employees, which in turn will attract top talent. In addition to providing a great work environment that respects employees and provides opportunities for learning and growth, it is also important that they receive a solid benefits package. At WageWatch, we provide accurate data for 2013 healthcare compensation, 2013 casino compensation and compensation information for a wide variety of other industries. To learn more about our up-to-date market compensation data, such as 2013 healthcare compensation surveys or university benefits surveys, call 888-330-9243 or contact us online.

Posted in Uncategorized on September 3rd, 2014 · Comments Off on ARE YOU ATTRACTING TOP TALENT?

# STATISTICS FOR COMPENSATION: PART 2

Data in its raw form, a string or table of numbers, is of little to no value in compensation. Data has to be summarized, described, and presented with particular analysis so that a decision can be made. The key to understanding compensation market data is to report data in a way that is easy to understand.

In the WageWatch Market Competitive Survey, subscribers select their competitors which create a custom set of data from peer organizations. The PeerMark Report™ contains useful statistics to measure the location of data with the set. The report shows where the central part of the data is in the form average and percentiles.

In prior blogs, we have presented central tendency in part as a discussion of average (simple mean) and median. Since then we have also introduced weighted average to the report which is another measure of central tendency. These points are provided on the report because all are needed to answer the question, ‘Which statistic to use for benchmarking?’ The answer is ‘It depends’.

The weighted average is used when the number of incumbents in the competitive set needs to be taken into account such as when comparing data sets that contain both very small and very large companies.  In an extreme example, if we had a city with only two hotel companies one with 10 housekeepers and the other with 1,000 housekeepers – then the one with 1,000 housekeepers dominates the marketplace and would determine the prevailing rate for this job. Here, weighted average would best represent the market rate.

The simple mean, also called average, is an unweighted calculation. Weighing competitors equally is a hedge against the unknown and is the recommended calculation when there are other competitors in the marketplace that have not participated in the survey. We do not know if the missing companies are big or small, pay low or high. This is why the simple mean is considered representative of market values.

There is an advanced metric called the Combination Mean which is the average of the simple mean and the weighted average. This gives equal importance to the number of incumbents and number of companies in the set.

We introduced percentiles in Part 1 of this blog topic. The percentiles and averages together describe what the shape of the data distribution of the competitive set “looks” like. The bell shaped distribution with a peak in the middle and tails on both ends, is called a normal distribution. While a true normal distribution is purely theoretical, there are many examples in the data are approximately normal.

The closer the market median and the market average wages are to each other, the more normal the distribution. In most reports, the median and averages rates will be within a dollar of each other. If the average is much greater than the median, the hump of the curve is skewed, leaning to the right creating a long tail on the left. This indicates a “hot job”, where the trend is to pay above market median. If the average is less than the median, the skew is to the left creating a long tail to the right indicating the job is cooling down.

WageWatch reports provide data tools and report statistics for analysts of all experience levels. Please contact WageWatch if you need assistance with interpretation the statistics reported, help building custom reports, or have a need for our wide range of consulting services. For more information on our services and surveys please call WageWatch at 888-330-9243 or contact us online .

Posted in Uncategorized on August 27th, 2014 · Comments Off on STATISTICS FOR COMPENSATION: PART 2

# STATISTICS FOR COMPENSATION: PART 1

The purpose of statistics in compensation is to provide mathematical tools to objectively identify and describe how much jobs are worth and how to pay employees in the context of organizational goals. Compensation professionals are tasked with making a business case for a recommendation to change pay or pay program by analyzing the underlying assumptions, pulling data from the right source, and preparing concise conclusions for the management team.

WageWatch reports its data in several ways. The Benchmark report is a fast and easy way to report on national, regional, state, and city market cuts of data. The PeerMark report is our advanced tool that allows the survey subscriber to build custom competitive sets at a granular or niche market level.

When analyzing data from either report, there are many analytic tools to choose from and it can be overwhelming for those preparing a compensation project for the first time. A straightforward and highly effective statistic to use to describe a situation and develop a solution is to use percent (%). In basic terms, a percent is a measure of relative value.

The percentage forms the basis of the WageWatch reports. Percent is used in many places in the survey in several different applications.

1. Percent Difference – The most common application of percent is its use in describing the difference between two numbers. The percent difference can be used to compare how wages change year over year as well as the difference between external to internal rates. There are two ways to describe differences using percent.

For example, your average rate of pay for a select service hotel Front Desk Manager is \$45,000 per year and the market average rate is \$55,000. It is easy to calculate that you pay \$10,000 less per year on average for this job. It can be expressed as a percent two ways.

1. You pay 18.2% less than the market average

i.     (\$45,000-\$55,000)/ \$55,000 * 100 = -18.2 or 18.2% less

1. The market average is 22.2% more than your rate.

i.      (\$55,000-\$45,000) / \$45,000 *100 = 22.2%

Both calculations are correct, so which to use? You could use both. “Our Front Desk Manager is 18.2% below market average. We need to raise our rate by 22.2% percent to match market average.” You can avoid having to explain the figures by restating this conclusion as “Our Front Desk Manager is 18.2% below market average. We need to raise our rate by \$10,000 to match market average”.

1. Percent Position – The percent position is used to state your overall market position relative to the competition in the data set. WageWatch allows subscribers to build custom reports by including a target percentile statistic that ranges from 11% to 89%. Percentile is a position that a given percentage of the data is less than or equal too. For example, if your target percentile is 60th, than that is a market position where 60% of the competitors are less than or equal to and 40% are greater than or equal to.
2. Percent as Ratio – A percent is a ratio multiplied by 100. We can see this when looking at dashboard metrics such as Turnover Rates. If a company fills one front desk agent position out of ten for the year, then the turnover rate can be expressed as 1:10 or 10%.

For these reasons, it is critical that compensation and HR professional understand how to use percent to communicate the story behind the data in a simple way. Please contact WageWatch if you need assistance with interpretation the statistics reported, help building custom reports, or have a need for our wide range of consulting services. For more information on our services and surveys please call WageWatch at 888-330-9243 or contact us online .

Posted in Uncategorized on August 19th, 2014 · Comments Off on STATISTICS FOR COMPENSATION: PART 1

# MARKET ANALYSIS: MEDIAN OR MEAN

Median and mean are useful measures of distribution that identify central values and tendencies of a data set. In a WageWatch compensation survey, median is the middle wage in a set of ranked market wages, which separates the data set in half. When an even number of wages are ranked, with no true middle value, the average of the two middle data points is the median wage. Median is also called the 50th percentile.

The arithmetic mean which is also called the simple average or mean is one of the most commonly used statistics in business. One of the reasons is that it is very easy to calculate. It is the sum of all values of a data set divided by the number of values in that set.

In a normal distribution of data, the median and mean wages will be within a few cents of each other. When the mean is greater than the median, this indicates the data set is skewed towards higher wages. Similarly, when the mean is less than the median, this indicates the data set is skewed towards lower wages. Skewing typically occurs for one of two reasons: either the data set is not normally distributed, or the mean is affected by outliers or errors in the data set. The first situation is not uncommon and occurs when there is either wage compression or the data is bimodal, meaning that the job description may be too broad and need to be bifurcated into two job titles. The second reason for the mean and the median being significantly different, due to an outlier or data error, is much more of a concern.

Here is an example of how data affects the median and mean differently when an outlier is added to the data set.

Wages in Data Set A                                                        Wages in Data Set B
\$9.25                                                                                      \$9.25
\$10.11                                                                                    \$10.11
\$10.56                                                                                   \$10.56
\$11.98                                                                                    \$11.98
\$12.50                                                                                   \$12.05
\$12.88                                                                                    \$12.31
\$125.00

Set A Median Wage \$11.27                                          Set B Median Wage \$11.98
Set A Mean Wage \$11.21                                              Set B Mean Wage \$27.32

In this example, it is clear that once the \$125.00 value is added as an outlier, the median wage becomes the better indication of the central value. Comparing the median with the mean from Set B tells us that while the middle wage or median is \$11.98, there appear to be employers paying at the top of the market, skewing the mean up sharply. The only way to know for certain if the difference between the median and mean is due to an error is a more thorough analysis of the data. If more data analysis is not possible, then the median is your better statistic to use.

WageWatch, Inc. is the leading compensation survey provider for over 5,000 hotels, non-profits organizations, healthcare organizations and management companies. The PeerMark™ Wage Survey is the only Web-based custom survey tool that allows individual survey participants to select their competitive set for comparison purposes.

At WageWatch, our expert evaluators provide businesses in a large range of industries with accurate and beneficial benefits survey data, compensation surveys and salary reports to ensure that payment and benefits plans are on par with those in the industry. For more information on market compensation data, please call WageWatch at 888-330-9243 or contact us online (https://www.wagewatch.com/Contact/ContactUs.aspx).

Posted in Uncategorized on August 13th, 2014 · Comments Off on MARKET ANALYSIS: MEDIAN OR MEAN

# NOT ALL SALARY SURVEYS ARE CREATED EQUAL

With traditional annual salary surveys, the process of data collection starts when the survey opens. The opening is followed by a window of time that is typically two to four months, and sometimes as long as six months. This survey window depends on the industry and number of positions surveyed, for which survey participants would report their payroll data for incumbents. At the end of the collection period, the survey closes and no additional survey participation can occur until the following year when the survey cycle is completed and the survey reopens. The date the survey closes to participation is referred to as the survey’s effective date.

Once the survey closes, the wage data is manually cleaned, analyzed, and the findings formatted into a compensation benchmark report. Building the report in this manner can take an additional two to three months and for some compensation surveys up to six months. Once the report is complete, it is made available to participants and is on sale until next year’s compensation report is published.

The traditional annual compensation survey, by design, reports last year’s data. Compensation professionals know the value of using the most update-to-date market data available to conduct their benchmarking and wage analysis.  WageWatch has responded to this need with salary surveys and benefit surveys that collect and report the most current data – never last year’s data. HR directors and compensation managers know the effective date for each participant. This approach creates a survey platform that is dynamic, never closes, and reports the most current market data available.

WageWatch uses the next generation methodology based on a 365-day subscription period that allows participants to continually update data and report findings during the year. WageWatch defines the effective date as the date on which wages are internally updated in an organization’s payroll system. WageWatch’s survey platform is dynamic and not static as are traditional annual salary surveys. While Wagewatch does have a close date for its compensation surveys, which would normally be referred to as the effective date in a traditional survey, this is a soft close date.

Because our surveys are dynamic compensation surveys, we continue to accept participants’ wage data after the close date of the survey.  Users can subscribe after the soft close date, enter their data and create their own custom reports all in the same day.  WageWatch reports allow you to select an entire market to compare your in house salary data, or you can select as few as five competitors you select to compare your salary data. This report is known as the WageWatch PeerMark™ Survey report.

Posted in Uncategorized on August 6th, 2014 · Comments Off on NOT ALL SALARY SURVEYS ARE CREATED EQUAL

# WAGE AND HOUR POTHOLES

Every company should perform wage and hour audits periodically; minimally once a year, twice if possible.  It is easier to catch and correct errors yourself than to risk discovery from employees or in the event of a DOL audit, and mistakes do happen.   To remain compliant with wage and hour regulations it helps to have the appropriate checks in place, such as up to date written policies and procedures, periodic training for supervisors and managers, effective complaint mechanisms should be in place and a regular audit process should be established.

Wage and hour violations are not only costly from the standpoint of back pay and penalties but can also lead to serious employee relations issues if employees feel they are not being fairly compensated.  Below, we present just a few of the many wage and hour potholes of which you should beware.

Overtime Pay

Many missteps can occur regarding overtime pay, here are a few:

• Misclassifying workers as ‘Exempt’ from overtime;
• not paying ‘unapproved’ overtime;
• failing to count all hours worked including pre and post work activities;
• failing to count certain activities as work time including working through a break;
• checking emails or performing other duties during time off; and
• travel time and meeting and training attendance.

Bonus or commission payments to nonexempt employees may impact overtime pay.   A bonus should be included in the calculation of the regular rate of pay for the weeks which the bonus is earned.  This will increase the overtime rate for these weeks.  The weeks for which the bonus is earned includes all weeks covered by the bonus period.  For example, if it is a quarterly bonus then all weeks in the quarter will apply.

Another consideration for computing overtime pay is when an employee works two or more jobs with different hourly rates at one or more facilities for the same employer in the same workweek. The employer must use the weighted average of the rates to compute the employee’s regular rate of pay for the purpose of calculating overtime pay.

Exemption Status / Salary Basis Test

Do you examine the duties of your salaried employees and not just their titles or how they are paid in determining whether they are exempt?  Your exempt employees must pass one of the FLSA exemption tests in order to be exempt from being paid overtime.  These exemption tests are based on actual worked performed,  and do not test based upon the job title nor what is written in the job description.

For a job to remain exempt it must pass the Salary Basis Test which ensures that improper deductions to exempt employee’s salary are not made.  There are very specific rules to follow when making any deductions to an exempt employee’s salary.  Also a job that is exempt can lose exempt status when the duties and responsibilities change due to things such as staff reductions or organizational changes.  Therefore it is advisable to retest jobs that are impacted by these types of changes.

Meal and rest period compliance

Many state wage and hour laws require employers to provide their employees with meal and/or rest breaks. These laws specify the circumstances under which such breaks must be compensated. In some cases, state laws impose different requirements than does FLSA.

A few more potholes worth mentioning

We have mentioned just a few of the many potholes HR professionals need to be aware when classifying jobs as exempt or nonexempt, overtime pay calculation and rest period compliance. Here are a few more you should keep in mind:

• failing to pay employees on day of termination;
• failure to follow rules for On-Call pay;
• improper use of ‘Comp Time’; and
• unlawful deductions from employee paychecks.

Of course, you should always consult your federal and state wage and hour resources and/or your wage and hour counsel to ensure a thorough and correct understanding of wage and hour rules.

Remaining compliant with wage and hour regulations is an important task that Human Resources and Compensation performs for an organization.   Another important task they perform is to ensure fair and competitive pay practices.  For the good of your employees, it is helpful to analyze benefits survey data, compensation surveys and salary reports.  Having this information at hand allows you to plan a budget, including competitive employee salaries and benefits, which will help you to hire and retain a happy, talented team.

At WageWatch, our expert evaluators provide businesses in a large range of industries with accurate and beneficial benefits survey data, compensation surveys and salary reports to ensure that payment and benefits plans are on par with those in the industry. For more information on market compensation data, please call WageWatch at 888-330-9243 or contact us online (https://www.wagewatch.com/Contact/ContactUs.aspx).

Posted in Uncategorized on July 30th, 2014 · Comments Off on WAGE AND HOUR POTHOLES