WageWatch Ibrief Blog

Login

Archive for June, 2014

PAY EQUITY ANALYSIS

To manage the risk of pay discrimination, organizations should conduct periodic pay equity analysis.  The goal of a pay equity study or analysis is to identify problems and ensure compensation practices are fair and equitable.  The study should look for trends that identify disparate impact on wage rates.  Data elements to include in the analysis are hire dates, hire rates, performance rating, merit increases, age, ethnicity, gender and promotion dates and increases.  Group the data in job classifications and departments by hierarchy as well as grouping comparable jobs across departments.  Sort the data by the various data elements to see what emerges.  This analysis can identify wage inequities as well as explain some of the differences in pay among comparable employees.  A thorough analysis is important for managing the risk associated with pay discrimination claims.

 Differences in knowledge, skill, ability, effort or responsibility provide a legitimate basis for differences in pay among employees doing the same work. However, these factors can be difficult to validate or prove, and therefore you will need to rely on the data that is readily available including:

  •  Job title or grade
  • Time in current job or grade
  • Job duties including degree of responsibility
  • Job status (Full or part-time, exempt or non-exempt etc.)
  • Location where the employee lives and works
  • Company service time
  • Education
  • Prior experience
  • Market value of a job
  • Performance Review documenting effort in terms of quantity and quality of work

 Pay equity issues can occur over time as a result of flaws in a compensation process including:

  •  Insufficient training of Managers regarding performance, merit and other increases
  • Inefficient and inconsistent merit pay processes
  • Decisions being made in “silos” and without consistent checks such as HR/Compensation approval
  • Making decisions without market or internal data for guidance
  • Reactive hiring decisions relative to “hot” jobs
  • Poorly maintained salary structures that have not kept step with the market
  • Failure to reclassify jobs as changes in responsibility occur

 A pay equity study will involve the input an experienced compensation analyst and/or specialist as well as HR information systems and may involve appropriate legal counsel.  Once pay inequities are discovered you will need to determine a timeline and the funding for the pay equity adjustments.

 The Lilly Ledbetter Fair Pay Act of 2009 increased organizations’ exposure to pay discrimination claims by overturning a rule that workers must sue for pay discrimination within 180 days after the original pay decision was made.  As a result of the Act, each paycheck now resets the clock and employees can file lawsuits for perceived discriminatory pay decisions even if the pay decision occurred years earlier.   So it is more important than ever for employers to carefully document all pay decisions and stay on top of pay equity in their organizations.

 At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives and that your pay practices are fair, equitable and non-discriminatory. We can provide your business with compensation surveys and salary reports to help you establish a budget for your merit pay program, including bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports and other services. Please call 480-237-6130 or contact us online.

Posted in Uncategorized on June 25th, 2014 · Comments Off on PAY EQUITY ANALYSIS

EMPLOYER PROTECTIONS AGAINST WAGE DISCRIMINATION

To ensure equal pay in the workplace and that all employees are paid fair and equal wages based on their position and skill, employers should implement and enforce a policy prohibiting wage discrimination based on an employee’s membership in a protected class.

Anti-discrimination regulations that can impact equal and fair pay practices include the Equal Pay Act of 1963 (EPA), the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Rehabilitation Act of 1973.  A claim under Title VII, the ADEA, the ADA, or the Rehabilitation Act, must first be filed with the Equal Employment Opportunity Commission (EEOC) (federal or state).  The EEOC processes allegations of discrimination based on race, color, sex, national origin, disability, age, and religion.  By law, the EEOC must accept the filing of any charge from any employee no matter how weak the claim.  The EEOC may investigate the claim and take action on it, or may advise the employee to seek his or her own attorney and proceed on their own.  After the charge is filed, the EEOC will send the employer a copy of the charge, and instructions regarding the employer responsibilities.  The burden of proof will be on the employer.

Under Title VII, it is illegal for an employer to discriminate based upon his or her race, national origin, gender, or religion and this will apply to hiring and firing decisions, disciplinary actions, training, promotions/demotions, harassment and all pay decisions.

The federal Equal Pay Act requires any employer that is already subject to the federal wage and hour Fair Labor Standards Act to provide equal pay to men and women who perform “equal work,” unless the difference in pay is caused by differences in seniority, merit or other factor that is not based on gender.

The Age Discrimination in Employment Act (ADEA) applies to employers with twenty or more employees and bars discrimination against employees or applicants who are over the age of forty.

The Americans With Disabilities Act (ADA) and the Rehabilitation Act bar discrimination against those with disabilities. The ADA bars discrimination by private employers with more than fifteen employees, and the Rehabilitation Act applies to all government entities and federal contractors. If an employee or applicant proves they have a disability, he or she is protected from discrimination and entitled to “reasonable accommodation” for the disability if necessary.

Employers should familiarize themselves with the federal laws and also with the state and city laws in which they operate.  To avoid wage differentials based on sex, race, national origin or any other protected class, ensure that the differentials can be justified by legitimate and nondiscriminatory reasons such as seniority, skill and experience.  Salary guidelines or bonus requirements need to be well documented and based on fair, objective, predictable and measurable criteria.  Supervisors and managers should be properly trained on how to avoid wage discrimination and how to make employment decisions based on legitimate, nondiscriminatory reasons.

All pay decisions should be carefully documented, as proper records will serve as a defense for a wage discrimination claim.  Performance evaluations should document clearly set expectations as well as how the employee has been measured or evaluated.  Frequent audits of pay practices should be performed ensuring pay differentials are based on legitimate and nondiscriminatory factors as well as supported by written documentation.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives and that your pay practices are fair, equitable and non-discriminatory. We can provide your business with compensation surveys and salary reports to help you establish a budget for your merit pay program, including bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports and other services, please call 480-237-6130 or contact us online.

Posted in Uncategorized on June 18th, 2014 · Comments Off on EMPLOYER PROTECTIONS AGAINST WAGE DISCRIMINATION

IT’S TIME TO CONSIDER THESE THREE HUMAN RESOURCE PROGRAMS

This article highlights three HR Programs that may just be worth consideration at this time.  None of these three programs are brand new ideas but each has continued to gain popularity.  All programs have pros and cons associated with them and organizations need to consider the positive and the negative impacts to both their organization and their employee population before implementing any new program.

Defined Contribution Healthcare

With the enactment of the Affordable Care Act (ACA), the launch of insurance exchanges, and the increasing cost of healthcare, it is an opportune time for employers to re-access the healthcare benefits that they offer to employees.  One option to consider is Defined Contribution Healthcare (DC Plans).  DC Plans give employers the option to shift some of the responsibility for healthcare to the employee.  As opposed to the traditional Defined Benefit Healthcare plans where an employer offers healthcare plans with defined benefits, DC Plans give the employers a choice of setting a dollar contribution amount towards an employee’s healthcare. The employee is then responsible for researching and purchasing their own insurance policies. The Employer can work with an insurance broker to help employees choose individual health insurance policies, and work with a Defined Contribution Administrator that will help educate, train, and support employees on their new health benefits.  Some advantages of DC plans are employers are alleviated of the administrative burden of choosing and managing their employees’ health plans, greater financial predictability for employers, portability for employees when changing jobs and it forces employees to become more educated consumers of healthcare.  Changing benefits is challenging especially healthcare benefits and employees may resist and struggle with this drastic change.  DC plans, however, may very well be the way of the future.

401(k) Automatic Enrollment

Studies show that most households’ retirement savings are dangerously low, overall participation in employer 401(k) plans are very low, and many employees cash out their 401(k) accounts when they change jobs.  Changing to an automatic enrollment 401(k) plan has proven to increase participation and overall retirement savings.  The majority of participants who are automatically enrolled do not opt out.  However, automatic enroll plans typically set initial enrollment contributions low such as 2% of pay and for some participants this is much lower than they would have chosen on their own.  Many automatic enroll plans also use automatic escalation where the contribution amount automatically increases each year.  Automatic enrollment can significantly increase employer match and therefore, some employers with automatic enrollment reduce their 401(k) match or choose a low default savings rate to keep compensation costs constant.  With retirement savings at a crisis level, automatic enrollment is worth consideration and a way for employers to show they care. 

Payroll (Debit) Cards

Some employers choose to submit payroll payments using direct deposit to employee debit cards instead of a standard check or deposit to a checking account. Submitting pay via debit card is a cost savings for employers eliminating paper and printed checks.  It can also save employees who do not have savings or checking accounts the effort and cost of cashing their checks at expensive check-cashing stores. Payroll debit cards can also be a way for employees to better manage their money as they use what they need rather than receiving the whole paycheck in cash.  However, there are some drawbacks.  Cards can be lost or stolen and the employer must have a system in place to recover funds quickly for the employee.  There are also fees associated with the cards, ATM withdrawal fees as well as ATM maximum withdrawal limits.  The popularity of these payroll debit cards is increasing among employer and employees; however, it may not work for all employees, and employers are required to give employees a choice on how to receive their paychecks.

WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with over 7,000 properties in its database. WageWatch also consults routinely with management companies on their pay structures and pay rates. 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.  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 June 11th, 2014 · Comments Off on IT’S TIME TO CONSIDER THESE THREE HUMAN RESOURCE PROGRAMS

DETERMINING PAY RATES

A company’s pay program generally includes base pay, incentive pay, and benefits paid to employees in exchange for work performed.  To determine employee pay levels, companies must strike the balance between affordability and employee motivation.  Other factors that influence pay levels are social, economic, legal, and political.  All these factors can make compensation management a complex and important part of the business. Ramifications of inadequate pay levels are employee turnover, poor performance, and reduced productivity.  

 Major factors to consider when determining your pay levels and pay scales are:

  •  Type of business – For jobs that are specific to your industry, you will be competing for talent only or primarily within your industry.  For some jobs you may be competing across several industries.
  • Company size – Company size can impact job requirements, for example, sales volume will have an impact on pay levels of your sales force.
  • Geographic Location – Cost of living impacts pay levels in each market, therefore, the exact same job can have widely different pay levels depending upon the city market it is located in. 
  • Types and levels of skills and knowledge required – Ensure that you have your jobs graded appropriately according to the skills and knowledge that is required for the job. 
  • Union affiliation or no union affiliation – The union will in most cases dictate pay levels for union employees and this will also impact your pay levels for your non-union employees at a union worksite and/or market.  In addition if you are non-union but competing in a largely union marketplace, you may need to compete with the union pay levels.
  • Total compensation package – In order to evaluate correctly the market pay levels, you need to collect market information regarding all forms of pay for each job including base pay and incentive pay.  There are also other factors that can impact base pay levels such as company benefits and company perks.
  • Management philosophy – Your companies pay philosophy on whether to lead, lag or match the market should be part of and in line with the management philosophy of the company.
  • Company profitability – Company revenues and budgetary limitations need to be considered when determining pay levels.

 Effective compensation management will align with company objectives and focus on internal equity, external competitiveness, employee contributions, and program administration. Compensation programs must be flexible enough to reflect the different needs of the individual and the organization, and the changing needs over time.

 Organizations can choose to pay more than the industry average, or pay less than their competitors’ average and rely on non-monetary rewards such as recognition events, achievement celebrations, and working in a pleasant environment. A competitive pay level can help contain labor costs, enlarge the pool of qualified applicants, increase quality and experience, reduce voluntary turnover, and discourage unionization

 At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. We can provide your business with compensation surveys and salary reports to help you establish a budget for your merit pay program, including bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports and other services, please call 480-237-6130 or contact us online.

Posted in Uncategorized on June 5th, 2014 · Comments Off on DETERMINING PAY RATES