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Archive for July, 2014

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

BUDGET SEASON: ARE YOU PREPARED?

It’s that time of year again when companies are preparing their budgets for the upcoming year.   For HR professionals, it is probably not one of your favorite tasks, but by embracing the process, it can be an opportunity to reinforce the HR function as a strategic partner. In the WageWatch 6/12/13 blog, Budget Boot Camp, we covered the fundamentals of the HR Budgeting process.  Now we will dive a little deeper into the specific elements of the HR Budget.

Budgets are used to monitor progress toward goals, help control spending, and predict cash flow and profit.  The challenge is predicting the future 100% accurately and in turn developing effective budgets.

It is valuable for HR to gain a strong understanding and appreciation for the value of good annual budgeting.  In most companies, employee costs constitute the majority of fixed costs and therefore the HR budget contains key and critical elements of the overall company budget.

Here are a few things you can do to make the budget process a smoother one:

  1. Throughout the year, ensure to include the CFO when reviewing such things as pay increases with the CEO.  This can go a long way to developing a partnership with the CFO.
  2. The credibility of the HR function is significantly improved when you can demonstrate real savings and value for HR Projects and Processes.
  3. Empower your HR team.  Every HR team member should own their line items in the budget.  For example, recruiting is responsible for their search firm fees, recruiting tools and relocation.
  4. Link the development of your budget to corporate strategy.   This gives a clearer understanding of strategic goals.  And, in turn, should create greater support for the goals, and, a stronger companywide performance. The key to linking the two is communication.  In order to communicate strategic goals, top management needs information about customers, competitors, technology, etc. and this information must come from support units such as Human Resources.
Budgeting   requires the collection of many forms of data. From a human resource   perspective, below are some items that would be included in the budget:Recruiting

  • Advertising & Agency fees
  • Employee referral program
  • Background checks / Drug Testing
  • Recruitment expenses
  • Applicant tracking system costs

Training

  • Training Programs
  • Travel expenses
  • Consulting fees

Compensation and Benefits

  • Payroll costs
  • Salaries  & Overtime
  • Compensation surveys / Benefit surveys
  • Incentive compensation
  • Health and Welfare Benefits
  • Retirement Plan
  • Employee Assistance Program

Employee and Labor Relations

  • Recognition program  / Service Awards
  • Employee Opinion Survey
  • Performance appraisal software
  • Employment and Labor relations expenses (attorneys, consultants)

Other

  • Strategic planning (data/consultants)
  • HR databases such as HRIS/subscriptions/memberships/books

At WageWatch our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary surveys 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 July 23rd, 2014 · Comments Off on BUDGET SEASON: ARE YOU PREPARED?

COMPENSABLE TIME

Employers need to ensure they count all worked hours as paid hours for their non-exempt staff. For example, when an employee eats lunch at their workstation or desk and their lunch is interrupted by work such as answering phones or email, the employee is working and must be paid for that time because the employee has not been completely relieved from duty.

If the employer has a policy that is expressly and clearly communicated to the employee regarding a specific length of time for a break, any unauthorized extensions of that break time do not need to be counted as hours worked.  Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time. However, the employee must be completely relieved from duty for the purpose of eating regular meals.

The federal Fair Labor Standards Act (FLSA), doesn’t require employers to provide meal or rest breaks, though some states do require such breaks and the rules can also be different for younger workers.  You can find a list of state meal and rest break laws at the Department of Labor’s website at  http://www.dol.gov/whd/state/meal.htm and  http://www.dol.gov/whd/state/rest.htm.

Employers that fall under the federal guidelines do not have to pay for meal or rest breaks unless:

  • The employee works through or during their break, or
  • The break lasts 20 minutes or less, or
  • The break is interrupted by work

Some other compensable time under the federal rules can include waiting time, on-call time, attendance at meetings and training programs, travel time and performing work outside of work hours such as checking emails.

Waiting time may or may not be hours worked depending upon the circumstances.  If an employee needs to wait before a duty can start such as a firefighter waiting for an alarm, then the employee is ‘engaged to wait’ and this time is worked time and must be paid.

On-Call Time is paid time if the employee is required to remain on the employer’s premises.   In most cases the on-call time does not have to be paid when an employee is not required to remain on the employer’s premises.   However additional requirements put on the on-call time that further limits the employee’s freedom could require the time to be compensated.

Attendance at meetings or training programs is paid time when any of the following conditions are true:

  • It is during normal hours,
  • It is mandatory,
    • If the employee feels that they should or need to attend, then it is mandatory
    • It is job related

Travel time may be paid time or not depending upon the kind of travel involved.  Regular commute time to and from the work site is not paid time.  When the employee works at a different work site location then any commute time that is greater than the employee’s regular commute time to their usual work site needs to be counted as paid time.

Travel that is part of the regular work duties, such as travel from job site to job site during the workday, is work time and must be counted as hours worked.  Overnight travel is work time and must be paid time

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 July 17th, 2014 · Comments Off on COMPENSABLE TIME

BEST PRACTICES FOR SALARY STRUCTURE DESIGN

Effective salary structures provide a framework for administering compensation programs and ensure that pay levels are both externally competitive and internally equitable.   Many design elements of salary structures are standard and common practice.  But some elements may vary depending upon company size, complexity or industry and types of jobs.  Most companies use market-pricing with current salary survey data for benchmark jobs to create and adjust salary structures.  Very few companies rely solely on the point-factor method, which assigns point values to jobs within a company.  But some companies blend market-based and point-factor approaches when designing their salary range structures.  Point factor systems can be costly and timely to administer and today many companies find that market pricing alone is the easiest and most effective approach.

Salary structures group benchmark jobs into salary grades (or levels) and most companies base the salary range associated with each grade on the salary survey median. The median is considered ‘at market’ and so becomes the salary range midpoint for the jobs assigned to a salary grade.  If a company wants to pay above market, they will select a salary survey percentile higher than the median such as 60th percentile and if they wish to compete below market, perhaps 40th percentile.  The market position may be the same for all jobs or may vary depending upon the importance of the job to the organization, but the vast majority of organizations will consistently target the median. 

The number of salary grades within a salary structure depends on the company’s organizational structure, the number, type and ranking of different jobs and levels of jobs within the company.  Every salary range has a minimum, midpoint, and maximum. The minimum or minimum range is often used as the starting salary, and merit increases move employees to the midpoint of the salary range as they become more senior and more experienced. The maximum is the highest rate paid for a position in that grade and it is advisable to cap at the maximum until such time that an update of the salary structure moves the maximum upward.  Some companies will give lump sum increases that do not add to base salary to well performing employees who are at the maximum. 

Traditional salary structures contain numerous pay grades with a relatively small distance between each range mid-point. Traditional structures are a hierarchal system where employees can be promoted from one pay grade to another. Traditional structures can provide a reasonable level of control over internal compression and salary expenditures.  Broadband salary structures consolidate jobs and job levels into fewer pay grades with wider salary ranges. Broadband structures are more prevalent in flat organizations that have few levels and also with small companies that do not have a compensation staff.   Additionally, many larger organizations will have more than one salary structure.  For example they may have one structure for administrative staff and one for managerial staff and another for the executives.  There also may be variances on the structure for different city markets.

The total distance from minimum to maximum is called a range spread and generally will increase as salaries and position levels increase.  In traditional structures, lower grades/ranges have smaller spreads typically between 30 and 60 percent. This assumes that it takes more time to learn, grow and advance into higher level jobs than it does the lower level positions.  In addition, the differential between each grade midpoint should be consistent. For hourly and non-officer employees, the differential between each salary grade midpoint may be 15 percent while the midpoint differential for higher grades could be 20 to 30 percent.

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 July 9th, 2014 · Comments Off on BEST PRACTICES FOR SALARY STRUCTURE DESIGN

PROPOSED WAGE AND HOUR LEGISLATION HIGHLIGHTS

Implementing Minimum Wage Increases on Federal Contractors

The U.S. Labor Department has released proposed regulations to raise the minimum-wage rate for workers on federal contracts from $7.25 per hour to $10.10 per hour  – subject to annual increases after 2015.  The proposed regulations generally apply to “new” contracts in one of four contract categories; 1. contracts covered by the Davis-Bacon Act, 2. contracts covered by the Service Contract Act, 3. concessions contracts and 4. contracts in connection with federal lands or employees.  A covered worker is one who performs work in connection with the covered contract and whose wages are governed by the federal FLSA, by the Davis-Bacon Act or by the Service Contract Act.  Also, as part of the regulation the tip credit wage would increase to $4.90 and overtime increases to the tip credit rate to bring it up to 70% of the full minimum wage. 

DOL Changes to FLSA’s Overtime Exemptions

In March President Obama directed the U.S. Labor Department to “modernize and streamline” its regulations governing the federal Fair Labor Standards Act’s executive, administrative, professional, and “outside salesman” exemptions. In the March Presidential Memorandum, President Obama stated his administration’s view that the exemptions’ current salary threshold means that “millions of Americans aren’t getting the extra pay they deserve” because “an exception that was originally meant for high-paid, white-collar employees now covers workers earning as little as $23,660 a year.”  The goal of this initiative appears to be to further limit these exemptions to include increasing the minimum salary requirement of $455 per week, and changing the duties-related requirements for exempt status so that fewer will qualify as exempt and more workers will become eligible for overtime pay.

Working Families Flexibility Act

This bill had been introduced to Congress in mid-2013 and failed to pass, however proponents have promised to continue to push for passage.  This bill would enable hourly non-exempt employees to receive compensatory time-off in lieu of overtime pay.  Employees could earn one and a half hours of compensatory time for each overtime hour worked and up to 160 hours per year could be “banked”.  Employees could use the hours for personal needs, such as receiving medical care, caring for a sick family member, or attending school function.  The employee can also choose to cash out their overtime bank and the employer must comply within 30 days.  Once an employee has accrued 80 hours,  the company has the option of  paying out the accrual in overtime pay.

Today’s world moves fast, and as an employer you should constantly be monitoring and adjusting your business operations to meet the ever changing wants and needs of your employees. 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 market compensation data, benefits survey data and salary reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on July 2nd, 2014 · Comments Off on PROPOSED WAGE AND HOUR LEGISLATION HIGHLIGHTS