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HOW HOTELS CAN SURVIVE LABOR INCREASES OF NEW MINIMUM WAGE AND OVERTIME LAWS

Labor cost represents the majority of a hotel’s expenses.  Minimum wage increases raise hotels’ operating costs which in turn may be passed along to guests in the form of higher room rates which may lead to decreased profitability.

Hotels may elect to reduce employment levels or staffing levels to control costs but these strategies may backfire.  Hotel industry jobs can require long work hours and be highly stressful, so reducing staffing levels could contribute to work overloads and increase turnover and possibly even increased workers compensation and health care costs.  Hotel operators are tasked with maintaining guest satisfaction, brand standards, reducing expenses and maintaining profit levels.  Hotel operators will need to be creative and have a long-term approach for mitigating the increased labor cost.

Find where the opportunities to reduce labor costs are.  Analyze and identify how much labor it takes to do any activity, then ensure staffing schedules  reflect this time.  Reducing labor inappropriately can reduce the level of hospitality and ultimately negatively impact revenues and profits.  It is important to spend time analyzing the projections and schedule to ensure a efficient scheduling.

Decrease work hours for hourly employees and hire more part-time employees to prevent overtime pay. Salaried managers could be required to handle more tasks and/or cover shifts normally covered by hourly employees. Hiring seasonal workers to meet demands during busy times of the year, such as the holidays and over the summer can make it easier to scale back on employees later when occupancy rates plummet.  Hotel employers may want to consider eliminating shift differentials as a way to reduce costs.

Change employee benefits for new hires.  For example, charge a nominal fee for meals, impose longer waiting periods for certain benefits to commence, and where applicable, reduce parking subsidies. Grandfathering existing employees will protect employee morale.

Cross-train employees. This can lead to more scheduling flexibility, a reduction in the number of employees on payroll and increased productivity. For example, front-desk clerks could be trained to answer external telephone calls in lieu of operating a separate PBX department.

Consolidate positions in which responsibilities overlap. For example, if multiple properties are managed by the same company and are close to one another, directors of departments such as front office, sales, accounting, housekeeping and maintenance could oversee all properties. This tactic must be carefully strategized to ensure that service is not disrupted and operational efficiencies aren’t compromised.

Invest in technology that increases guest satisfaction while decreasing operating costs. For example, mobile applications that allow guests to check in on their smartphone and use it as their key eliminate wait time in the lobby and require fewer front-desk staff. Virtual concierges reduce the need for guests to engage with employees.

The practice of outsourcing off-site has become prevalent in the hotel industry. Laundry services, housekeeping, equipment maintenance, spa, valet, security, and information technology, are all commonly outsourced functions.  Hotels can reduce costs and liability.  However, hotel employers should be mindful of potential joint employer liability. Under the new “joint employer” standard, a hotel may not only be held liable for its own labor violations, but for those of a franchisee entity as well. Analyzing joint employer criteria is paramount when making the decision to outsource.

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 February 25th, 2016 · Comments Off on HOW HOTELS CAN SURVIVE LABOR INCREASES OF NEW MINIMUM WAGE AND OVERTIME LAWS

2016 HUMAN RESOURCE LEGAL LANDSCAPE

The employment legal landscape continues to evolve.  Here are a few legislative changes that are slated to take effect in 2016 under federal law.

Minimum Wage Increase for Federal Contractors:  Two years ago, a minimum wage for federal contractors was established for work performed in connection with covered contracts with the federal government. On January 1, 2015, the minimum wage requirement was set to at least $10.10 per hour. Effective January 1, 2016, the minimum wage rate is set to increase to $10.15 per hour. The Order applies to (1) procurement contracts for services covered under the Service Contract Act, (2) procurement contracts for construction covered under the Davis Bacon Act, (3) concession contracts, and (4) contracts entered into in connection with federal property or lands that are related to the offering services for federal employees, their dependents, or the general public.

Federal Contractors Pay Secrecy Policies and Actions: Effective January 11, 2016, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) under Executive Order 13665 (which amends Executive Order 11246) announced a Notice of Proposed Rulemaking (NPRM) to prohibit pay secrecy policies and actions by covered Federal contractors and subcontractors.   Federal contractors are prohibited from discharging or discriminating in any other way against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant.

Proposed Rule Changes to the Fair Labor Standards Act:  On July 6, 2015, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rule Making in which it announced a proposed rule that would increase the minimum salary required for a worker to be classified as exempt from overtime under the Fair Labor Standards Act (FLSA). Under the proposed rule, the minimum salary level required for the overtime exemption would increase from $455 per week or $23,660 per year, to $970 per week or $50,440 per year. Additional proposed rule changes include a new minimum total annual compensation requirement for qualification as a highly compensated employee under the FLSA and a newly established mechanism for annually updating the minimum salary and compensation levels for exempt employees. Comments to the proposed rule changes were accepted by the DOL through September 4, 2015. Final regulations have not yet been published but are expected to be issued sometime in 2016.

Pregnant Workers Fairness Act (PWFA):  The Equal Employment Opportunities Commission (EEOC) has had a top priority over the past two years of enforcing the rights of pregnant workers.  It is believe that the PWFA will become law in 2016 as it is already before congress.

The PWFA is expected to establish new guidelines which are designed to protect the rights of expectant parents. It is expected to mandate employers to make accommodations for the realities which arise from pregnancy, childbirth and associated medical conditions. The ultimate goal is to ensure that employees are no longer put in a position where they have to choose between pregnancy and a job.

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 February 17th, 2016 · Comments Off on 2016 HUMAN RESOURCE LEGAL LANDSCAPE

PAY COMPRESSION: CAUSES AND SOLUTIONS

Pay compression is when either a subordinate’s base pay is very close to or more than their supervisor’s or when a less tenured employee is equal to or paid more than a senior employee in the same position.  One of the most common causes of pay compression is when pay increases for current employees are low, but new employees are paid a higher salary to attract them.  This problem becomes more severe in economic downturns when pay increases are limited but it occurs even in better economic times.  Pay compression is most evident in pay systems where lower level jobs, either through union contracts or other market forces, create a situation where first-line supervisors are paid less, on an hourly basis, than their subordinates.

When the job market is weak, many organizations hire people who had already done the same work for another organization, eliminating the need for training. Rather than hiring people with high potential and developing them for the long term, they have opted for people who can “hit the ground running,” regardless of their potential.

When salary compression and the policies that enable it are sustained over several years, it can be demoralizing and lead to widespread employee dissatisfaction. Employers should be concerned, because salary compression can transform compensation from a motivator into a de-motivator.

Salary compression may be accompanied by pay inequities which could violate equal pay regulations. In situations where newer staff earn more than experienced staff, it could create a pay equity problem if the experienced staff are a protected class.

There are steps that can limit the detrimental effects of salary compression. For instance, when a new job opens, organizations should try to promote someone from within, rather than hiring from the outside. Many organizations have policies that limit how high within a range new hires can be paid.  When new hires are brought in at higher salaries or when across the board increases are given due to market movement or minimum wage increase, have a policy that requires internal equity analysis and adjustments.

Institute a policy of transparency and calibration across units.   Disparate actions between different organizational units can create salary compression and other inequities. Transparency can take the form of a simple scorecard showing the rates of increases and promotions in each unit. Calibration can involve managers sharing planned compensation actions with their peer managers. It can also include several levels of approval for any actions before they take place so that a senior leader can spot any actions that appear suspect and will cause inequities, including compression.  This tends to create a norm and, over time, leads to decisions that are more consistent and responsible.

Salary compression can be a serious problem that eventually causes an organization to lose some of its most talented employees. Although many organizations have unintentionally allowed salary compression to take root, there are actions they can take now and in the future to keep it from reoccurring.

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 February 10th, 2016 · Comments Off on PAY COMPRESSION: CAUSES AND SOLUTIONS

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 healthcare compensation surveys, 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 current healthcare compensation surveys, casino compensation surveys 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 healthcare compensation, hospitality and 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 hospitality industry compensation surveys, call 888-330-9243 or contact us online.

Posted in Uncategorized on February 4th, 2016 · Comments Off on ARE YOU ATTRACTING TOP TALENT?