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Archive for April, 2015

SALARY RANGE DISCLOSURE

The question of whether or not to share salary grades and ranges with employees continues to be debated.  Some companies provide their salary structure to all employees, some provide portions of the structure on a need to know basis, while others hold the information in the strictest of confidence.  Non-disclosure of salary ranges can create confusion and even suspicion and distrust among employees.  Alternatively, companies that share information about pay ranges tend to have more committed employees and higher retention rates.  Salary Ranges are also an effective tool for recruitment.  

There are many advantages to disclosing pay ranges to your employees.  Full transparency can help cultivate a culture of fairness and provide employees with a greater understanding of how their role impacts company goals.  The salary ranges are a useful tool for managers to align employee expectations with market realities and to manage pay progression within their departments.   They are also helpful to employees when making decisions about their next career move.   

A well-defined compensation strategy can help you communicate your salary structure, and handle questions and potentially difficult conversations with greater success.  Employees can still disagree, but communicating honestly about pay at least provides a better understanding.  

For salary range communications to be effective, you need to ensure your structure grew out of current and competitive market data that was carefully matched to your jobs and that a thorough and accurate market analysis produced the resulting salary ranges.  You will need to be able to define and defend your labor markets, survey sources, how pay ranges were determined and how jobs were assigned to grades and corresponding pay ranges.  If you have done the job properly, explaining and defending the salary ranges should be easy.  Be prepared to respond to questions regarding employee’s compa-ratio or position in the salary range and/or market point.  

Salary ranges can help with communications during the merit increase process, especially if pay increases are based on performance and/or position in range.  Some information does not need to be shared.  For example, executive salaries (typically above the Director level) are normally not disclosed and actual salaries of employees do not need to be disclosed except under a union bargaining agreement.  Be selective and discreet about the information that you share as well as how it is presented. 

Employee complaints about salary usually stem from a few core issues, including perceiving salary decisions as unfair, confusion regarding the compensation system and disputes regarding their performance evaluations.  If jobs have been fairly and objectively evaluated and priced against both internal and external factors and there is nothing to hide, if you can defend and explain your decisions, then why not consider full disclosure of your salary structure?

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. WageWatch also offers accurate, up-to-date benefit surveys, salary surveys and pay practices data 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 April 29th, 2015 · Comments Off on SALARY RANGE DISCLOSURE

LIVING WAGE: THE MINIMUM WAGE RAISE DEBATE

Guest Author:  Amy Klimek, VP HR ZipRecruiter

Overview

One of the biggest political and social debates currently going on is the debate of the minimum wage. A minimum wage is essentially the least amount that a business can pay an employee per hour. In the United States there is currently a minimum wage set at a federal level although there are states and cities that have a higher minimum wage above what the federal level is currently set at. On both sides of the argument there are passionate people who truly believe that they are correct in their beliefs. In looking at the issue, it is important to look at both sides of the argument in order to make an informed decision.

Pros of A Higher Minimum Wage

A higher minimum wage would generally benefit those of the lowest economic classes who make the least amount of money. Anyone who is currently making the federal minimum wage will have an extremely hard time supporting a family with children. Proponents of a higher minimum wage believe that this minimum should be raised in order to help out those who are struggling every month to pay the bills. 

In addition to this basic argument, proponents of a higher minimum wage believe that paying people more will stimulate the economy over the long term. Higher consumer spending has typically resulted in an overall boost of economic output in the United States. By following this argument, those that support a minimum wage hike say that businesses would actually benefit over the long run simply because consumers will have more money to spend on goods and services.

Finally, there is a moral argument to having a higher minimum wage that many people will bring up. Many proponents believe that the one percent should not control such a large percentage of the income and wealth in a country. By raising the minimum wage, the wealth in this country would be more evenly spread out among a larger group of people rather than being concentrated at the top. 

Cons of A Higher Minimum Wage

On the other side of the argument are those that believe the minimum wage should not be raised and in some cases done away with entirely. In economics, a price floor is something that increases supply and reduces demand for a product or service. If the minimum wage is raised, there will be a decrease in the need for workers. At a fast food restaurant for example, if a worker is suddenly paid twenty dollars an hour it now starts to make more business sense to start to outsource that job or position.

In reference to the moral argument made by many people who are in favor of raising the minimum wage, those that are against will say that it is not in fact moral to distribute wealth. Many people believe that this country was founded on the promise of free enterprise and that a business should have a choice on how much to pay their workers. In fact, many businesses wish that they could pay employees whatever they would like.

The final argument for those that are not in favor of a minimum wage increase is that the demand will be made again in the future. If the minimum wage is increased now, who is to say that the same will not happen again in a few years? In addition, those people that are now making more than the minimum wage will demand higher wages in response to legislation making the new minimum wage much higher than it is now. This will result in overall wage inflation which could increase the unemployment rate. At the end of the day, businesses only hire employees because they believe that employee can make the business more money than they are getting paid. If all employees are now two or three times more expensive, businesses may cut down on the total workers that they will employ.

Future of the Minimum Wage

The issue of what rate the minimum wage should be set at is an issue that is not going to go away any time soon. Politicians on both sides of the aisle have strong feelings on the subject, and in the upcoming elections at all levels the minimum wage will be a hot topic. It will be interesting to see over the next couple of election cycles just how much the minimum wage rate is debated. What is for certain is that there are passionate people on both sides of the aisle and the issue will not be going away any time soon.

 About WageWatch

WageWatch offers accurate, up-to-date HR metrics, 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. 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.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.   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

Amy Klimek is an experienced HR recruiter and VP of Human Resources for ZipRecruiter, she was employee #7 at Rent.com, where she first worked with ZipRecruiter’s founders. Her philosophy on human resources infuses the company culture: “To create an open, enriching environment by hiring the best, keeping the rules to a minimum and making it fun.” She’s married and has three active children to whom who she enjoys playing chauffeur.

Posted in Uncategorized on April 22nd, 2015 · Comments Off on LIVING WAGE: THE MINIMUM WAGE RAISE DEBATE

MERIT MATRIX

The first merit matrix was introduced in the early 1970’s.  At that time merit pay was seen as a great way to manage employee performance and it seemed to work well with pay increases in the double digits.  Today is a different story, trying to incorporate a performance element when budget increases are 2 or 3% is difficult at best.  A merit matrix allocates budgeted dollars to employees based on two factors: 1) their performance; and 2) their salary’s position in the salary range and/or in the market.  However, the merit matrix may not be in line with your compensation philosophy nor meet your salary administration needs by allocating dollars to where you need them most. 

Many companies do not have a separate budget for market adjustments and rely on merit increases to remain competitive.  However, employee pay can quickly fall behind market if the merit budget is 3%, and the market is increasing at a greater rate.  When merit increases are not keeping step with the market, pay compression may result.  You may be faced with having to hire new employees at higher rates than current employees. 

In spite of the potential drawbacks, merit increases are still prevalent, and are the primary ‘pay for performance’ vehicle in many organizations.  Changing the merit pay ‘mindset’ and employee expectations can seem like a monumental task.  But there are many organizations considering other ways to pay for performance such as carving out a portion of the salary budget for key contributors.  Since ‘average’ performers represent the majority of your employees, they are designated to receive ‘average’ increases, and this allocation accounts for the majority of your budget. 

Some organizations are moving from the merit matrix to multidimensional decision tools that use several factors adding further differentiation especially among the ‘average’ population. These factors can include such things as long-term potential, sustained performance over time and specific skill sets.  The factors can also be weighted differently.  When selecting factors, ensure they align with the organization’s HR strategy, job value, and compensation philosophy.  Variable pay plans can be added and some organizations have even replaced merit pay completely with variable pay, but this can increase the risk of losing top-performing employees. However, variable pay plans that include an individual component can be an effective reward for top performers.  Another more radical approach is to tie nonmonetary elements within the total rewards package to individual performance.  For example, flexible work arrangements, additional paid time off, and career development. 

Merit budgets are beginning to move back upward with 3-4% average forecast this year; still a relatively small amount, therefore, organizations that plan to continue with merit pay systems should minimally look for ways to improve their current system.  Organizations that take the time to develop and use methods and tools other than merit pay should see a return on investment. 

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. WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with 6,000 properties participating in its PeerMark™ Wage Survey. WageWatch also conducts compensation surveys for other business and industry segments including healthcare and non-profits. For more information on our services, including market compensation data, benefits survey data, salary reports, and consulting services, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on April 16th, 2015 · Comments Off on MERIT MATRIX

LODGING INDUSTRY IS A LEADER IN JOB CREATION

Last week, the U.S. Bureau of Labor Statistics released its employment statistics for March 2015. The lodging sector, referred to as the Accommodation subsector by the BLS, exceeded employment numbers for any March in history at 1,901,100 jobs.  The highest previous March was in 2008. This is the third month in a row that employment has exceeded 1.9 million. It is also the eleventh month in a row that the monthly employment figures have set new highs for that month. For the rolling 12-month period, average monthly employment has been1.892 million also a new record for employment in the lodging sector. 

When compared to other key subsectors reported on by the BLS, lodging is a leader in employment growth along with healthcare, while other key sectors such as construction, manufacturing and retail continue to lag.  Overall, employment growth in March was disappointing with an increase of only 126,000, the lowest reported month since December 2013 and half of what was forecast for March. Most leading economists are anticipating the employment numbers to improve in April and the second quarter of 2015. 

Another key statistic, average hourly earnings for the Accommodation subsector adjusted for inflation as reported by the BLS also snapped back by almost 4% in the last year, again the best performance since 2007-08. Also, the average hours worked by employees in the lodging sector have increased and are almost back to their prerecession levels. 

Another key indicator for the lodging sector reported by BLS is the percentage of jobs posted in the Accommodation and Food Service industries left unfilled at the end of each month, which has now reached a new high at approximately 45% as compared to 41% peak in November of 2007. Hotels are experiencing longer wait times to fill openings, as well as more voluntary quits as the job market strengthens. The tightening job market for hotels will continue to place pressure on management to pay employees more and continue to increase hours for employees in order to minimize turnover and maintain staffing levels. 

Overall, the lodging industry continues to perform well with all-time highs for occupancy being posted over the past year as well as strong revenue growth.  Smith Travel Research and PKF Consulting are forecasting record performance for the lodging industry in 2015 and 2016.  

WageWatch offers accurate, up-to-date HR metrics, 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. 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.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.   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 April 8th, 2015 · Comments Off on LODGING INDUSTRY IS A LEADER IN JOB CREATION

HOW TO AVOID PERMANENT ACA HEADACHES WHEN WORKING WITH TEMPORARY EMPLOYEES

Guest Author, Alan Hahn, Davis & Gilbert LLP

Just about every employer has them in their workforce—employees who are not quite “regular” employees.  They can be called one of several names, including the following:

  • freelancers;
  • project-based employees;
  • on-call employees;
  • interns;
  • consultants;
  • seasonal; and (perhaps most common of all)
  • “temporary.” 

Historically, employers used these labels to identify employees who were not eligible for benefits and other employment perks. This was oftentimes an acceptable practice as long as benefit plan documents were amended appropriately and certain other steps were taken. Now, however, with the advent of the Affordable Care Act (ACA), additional concerns may apply in respect of temporary employees, specifically where temporary employees may occasionally (or not so occasionally) work a full time schedule.  This article provides a quick run-down on why your temporary employees may give you a permanent ACA headache in 2015.*

The ACA employer mandate

As is well known by now, the Affordable Care Act (ACA) requires “large” employers to offer affordable health care coverage to full-time employees or be taxed. A large employer is generally one that has 50 or more full time employees (including full time equivalents). Employers between 50 and 99 full-time employees (including full time equivalents) generally have an extra year to comply with the ACA, although they must comply with the IRS “information reporting” requirements in 2015 (new IRS Forms 1094 and 1095).

Under the ACA, affected employers will need to identify any employees who are full-time under the ACA (including temps) and report them to the Internal Revenue Service (IRS). Moreover, employees identified as full-time can trigger an ACA tax on the employer if medical benefits are not offered at the right time.

Who is a full-time employee?

Full-time generally means someone who is working at least 30 hours per week (130 hours of service in a month is generally treated as the monthly equivalent of at least 30 hours of service per week). The ACA does not have a “temporary employee” classification. Instead, the treatment of temps depends on how the employer complies with the ACA in respect of the rest of its workforce under one of the following two methods. 

There are generally two methods for complying with the ACA:

  1. Monthly Measurement Method: Under the monthly measurement method, an employer looks at its workforce each month and determines who it must offer benefits to and for whom it must pay an ACA tax for not offering benefits.  It’s a clunky method for any employer that has temporary employees that might work full-time in some months but not others, since temporary workers tend to have hours that fluctuate or vary from month to month.  Thus, an employer may have an obligation to offer benefits or pay a tax in any month in which a temporary employee works full-time (or offer benefits all the time, after 90 days of employment, if the employer is concerned the temp may be full-time in any month). This method can be useful to some employers, but many employers seem to be using some form of a look-back method, at least so far.
  2. Look-back Method:  This method allows an employer to test its ongoing workforce in a prior period (e.g., 2014) to determine who is eligible for benefits in a subsequent period (e.g., 2015).  For new employees who are classified as full-time, benefits must be offered following hire (generally, a three month waiting period can be accommodated).  For new employees who can be classified as “variable hour” or “seasonal,” an employer can wait some period of time (generally, up to a year) and then see if the employee worked full-time hours during this “initial measurement period.”  Thus, under this method, it is possible that a temporary employee can be classified as variable or seasonal.  If they can be so classified, the temp would need to actually work full time over an initial measurement period to then become eligible for benefits thereafter. 

Which employees are “variable”?

This question is where the rubber meets the road for many employers and their temps, as the determination is not so straight-forward in many instances.  The regulations define variable as, “[b]ased on the facts and circumstances at the employee’s start date, the employer cannot determine whether the employee is reasonably expected to be employed, on average, at least 30 hours of service per week during the initial measurement period because the employee’s hours are variable or otherwise uncertain.” This sounds like many temps, although this is not always the case. 

Somewhat helpfully, the regulations provide factors to consider including:

  • Is the employee replacing a full-time employee?
  • Are employees in the same or comparable positions full-time?
  • Was the job advertised, or otherwise communicated to the new hire, or otherwise documented (for example, through a contract or job description), as requiring 30 (or more) hours of service per week?

In addition to dealing with the issue of temps paid on an employer’s payroll, many employers are grappling with their ACA obligations in respect of temps sourced and paid through third party staffing agencies. In that case, it may be unclear as to who is responsible for ACA compliance—the staffing agency or the client/employer. The answer under the regulations is that the entity that is the “common law” employer is responsible for ACA compliance with respect to that worker, even if someone else is paying them.  However, it is not always clear who that common-law employer is.

Checklist: evaluating ACA exposure when it comes to temps:

  • Identify your non-regular staff, including any staffing firms that pay your temporary workers
  • Consider if you should use the ACA monthly measurement method or look-back method
  • Examine your use of “variable” and “seasonal” labels
  • Consider amendments to employee offer letters to bolster your ACA approach
  • Evaluate client service agreements with staffing agencies (get a strong indemnity)
  • Review the new information reporting requirements (IRS Forms 1094 and 1095)
  • Respond to notices from the Exchange that may be coming in 2015
  • Work with legal counsel on an evaluation of your compliance approach in 2015
  • Amend plan documents, as appropriate

*The article is necessarily brief; therefore, important information on ACA compliance may be omitted or stated in summary fashion

 Alan Hahn is a partner in the Benefits & Compensation Practice Group of Davis & Gilbert.  His practice is devoted to advising clients in the design and implementation of creative, unique and tax-effective employee benefit plans and programs.  For more information, Mr. Hahn may be reached at 212.468.4832 or ahahn@dglaw.com.

WageWatch offers 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. 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.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.   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 April 1st, 2015 · Comments Off on HOW TO AVOID PERMANENT ACA HEADACHES WHEN WORKING WITH TEMPORARY EMPLOYEES