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Archive for October, 2015

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 October 28th, 2015 · Comments Off on WAGE AND HOUR POTHOLES

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 October 14th, 2015 · Comments Off on HUMAN RESOURCES ROLE IN MERGERS AND ACQUISITIONS

TIP CREDIT AND TIP POOLING

The federal tip minimum wage was originated in 1966 and at that time was 50% of the federal minimum wage.  Today it is 29.4% of the federal minimum wage.  Over half the states and the District of Columbia have tip minimums that are higher than the federal. These range from $2.33 an hour in Wisconsin to $7 in Hawaii.  Washington is one of seven states with no tip credit law, so employers pay the state’s full minimum wage, currently at $9.32 an hour, the highest in the nation.  The other states that prohibit the tip credit are: Alaska, California, Minnesota, Montana, Nevada, and Oregon. Servers who work in these states receive the same minimum wage as all other workers.  

By definition, a tipped employee customarily and regularly receives more than $30 per month in tips.  Under federal law and in most states, employers may pay tipped employees a base wage of less than the minimum wage as long as it does not fall below the tip minimum wage and employees must receive enough in tips so that their hourly rate plus tips received equals at least the regular minimum wage.  The difference between the regular minimum wage and the hourly rate in which the employer pays is called a “tip credit”, which is essentially a credit for the employer towards the regular minimum wage rate.  If a tipped employee does not earn enough in tips to bring his/her total compensation up to at least the applicable minimum wage, the employer has to pay the difference.  Tipped employees’ total earnings (base wages paid by employer + tips) must equal at least the minimum wage that governs in their jurisdiction. 

Overtime must be calculated and paid on the full minimum wage for tip employees and not on the tip minimum wage or direct cash wage payment.  Employers are required to provide a tip credit notice to their tip employees in advance of their pay and any pay changes.  The notice informs each tipped employee about the tip credit allowance before the tip employee’s first paycheck and before any paycheck in which there is a pay change. The notice must include the amount of wage the employer will pay, the amount the employer will credit against tips as well as specific tip credit rules.

 In states that allow employers to require tip pooling, certain employees such as wait staff may be required to pool their tips with bartenders and bussers for equal disbursement at the end of a shift. All employees subject to the pool have to chip in a portion of their tips, which are then divided among a group of employees. An employee can’t be required to pay more into the pool than is customary and reasonable, and the employee must be able to keep at least the full minimum wage.  Only employees who regularly receive tips can be part of the pool. Employees can’t be required to share their tips with employees who don’t usually receive their own tips, like dishwashers or cooks nor can tips from a tip pool go to employers.  In some states, managers or supervisors are also prohibited from receiving tips from a tip pool.  There is no maximum amount or percentage of tips for a valid mandatory tip pool, according to the federal rules. But employers must notify tipped employees of any tip pool contribution requirements and are prohibited from retaining tips for any other purpose. 

According to the FLSA, mandatory service charges (ie., mandatory 15% charge paid out to wait staff) are not considered tips and cannot be counted for use as a tip credit. The service charge may be counted as part of the employee’s minimum wage and overtime requirements. However, employees who receive tips in addition to a mandatory service charge are considered tipped employees by the FLSA. A well planned salary and total rewards package will motivate your employees, help your company maintain a competitive advantage and help retain key employees.  Please refer to your federal and state wage and hour resources for full details regarding all tip wage regulations. 

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 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 October 8th, 2015 · Comments Off on TIP CREDIT AND TIP POOLING

STRATEGIC ISSUES AND THE PAY MODEL

Perceptions of compensation vary.  It is seen as a measure of equity and justice.  Stockholders are focused on executive compensation.  Legislators may view average annual pay changes as a guide to adjusting eligibility for social services.  Employees see compensation as a reward for their services and a job well done.  Managers will view compensation from the perspective of a labor cost, but also from a competitive perspective that enables them to recruit, engage and retain employees.  The four basic compensation policy decisions that an employer must consider in managing compensation are: 1. Internal consistency, 2. External competitiveness, 3. Employee contributions, and 4. Administration of the pay system.  The balance between the four policies becomes the employer’s compensation strategy.

It is important that compensation is linked to an organization’s overall goals and strategies and aligned with Human Resource strategy.  Not doing so, can lead to serious issues of employee retention, engagement and productivity that can be laborious and expensive to repair.  Compensation for many organizations is the single largest business expense and is visible and important to employees, managers and stockholders.  Therefore it is important to strategically plan and regularly evaluate compensation systems.  Working with your company’s executives is key to ensuring your compensation philosophy is supporting business objectives.  Strategic objectives will include significant challenges and priorities now and over the next 2 – 5 years.  Some examples are business growth plans, key talent and training objectives, market competition, and whether or not you are in a union environment.  Some other key considerations for your compensation program are:

  • Attracting the appropriate skill sets and types of employees when needed
  • Rewarding employees for their efforts, such as increasing workloads, taking on new tasks and projects
  • Employee morale and perceived value of company’s benefits, incentives, and work environment
  • A mix of base pay, incentive pay, work environment and benefits that makes the most sense for the organization
  • The link between base and incentive pay with performance
  • Legal issues such as wage and hour

An example of a compensation strategy that aligns with other Human Resource initiatives is matching pay ranges to desired outcome.  If quality, experience and a sophisticated skill set are a strategic advantage to an organization, then it will not be successful hiring employees significantly below the market rate.  Determining whether the organization wants to lead, lag or match the market is a key decision.  A ‘mixed market position’ approach has become more common as employers realize that a one-size-fits-all strategy does not fit the entire workforce.  For example, location and market competitiveness will impact your pay levels and certain key or hard to fill or retain positions may require pay well above the market, while other positions may be ok with a lag approach.

A successful compensation program will focus on top priorities, guide employees to where their effort can create the most value, create financial and non-financial consequences for success and failure, drive and reward the development of skills and encourage teamwork and collaboration.  Many organizations today keep an eye toward aligning workers’ interests with company goals through innovative types of rewards in the workplace, including skill based pay and goal sharing.  The right total rewards system is a blend of monetary and nonmonetary rewards offered to employees and can generate valuable business results.  These results range from enhanced individual and organizational performance to improved job satisfaction, employee loyalty, and workforce morale.

Maintaining a competitive advantage and being able to retain key employees is increasingly important.  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 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 October 1st, 2015 · Comments Off on STRATEGIC ISSUES AND THE PAY MODEL