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NEW GUIDANCE ISSUED ON FEDERAL ANTITRUST REGULATIONS

The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued joint guidance on Oct. 20, 2016, https://www.ftc.gov/system/files/documents/public_statements/992623/ftc-doj_hr_guidance_final_10-20-16.pdf, on how Antitrust Law applies to employee hiring practices and compensation decisions.  The guidance focuses on managers and human resource (HR) professionals who are normally responsible for regulatory compliance and can, therefore, implement safeguards.  In addition, the guidance announces a significant shift in the DOJ’s enforcement policies stating that the DOJ intends to proceed criminally against “naked wage-fixing and no-poaching agreements”.  The agencies underscored the fact that violators could be pursued both civilly and criminally. The new guidance makes it clear that DOJ and FTC will look suspiciously at employers sharing information regarding terms and conditions of employment — such as industry wage surveys.

As part of their guidance, the DOJ and FTC issued what they called Antitrust Red Flags for Employment Practices. The link to these nine Red Flags is https://www.ftc.gov/system/files/documents/public_statements/992623/ftc-doj_hr_red_flags.pdf. The list is a starting point for what they will be looking for and is not exhaustive of possible indications of antitrust violations. They note that if you notice these red flags or other suspicious behavior and believe that there may have been an antitrust violation, they encourage you to report it to the DOJ and FTC.

The DOJ and FTC caution employers about sharing compensation information with competitors. While not per se illegal (like wage-fixing and no-poaching agreements), the agencies note that such information-sharing such as salary and benefits surveys conducted by industry associations and trade groups could be suspicious.  The guidance directs HR professionals to avoid sharing competitively sensitive information with competitors.  Evidence of exchanges of wage information such as discussion of compensation levels or policies at industry meetings or events could be sufficient to establish an antitrust violation.  Exchanges are permissible in certain circumstances (i.e., it may be appropriate for a company to obtain competitively sensitive information in the course of M&A due diligence), but only if suitable precautions are taken.

Statement of Department of Justice and Federal Trade Commission Enforcement Policy on Provider Participation in Exchange of Prices and Costs, an issue in August 1996, remains as the primary guidance in the exchange of compensation information for employees that will not result in a challenge of an antitrust violation by the DOJ and FTC. From an antitrust perspective, firms that compete to hire or retain employees are competitors in the employment marketplace.  Managers, HR professionals, and employees with access to compensation information should not communicate the company’s policies to other companies competing to hire the same types of employees.

Not all information exchanges are illegal.  It is possible to design and carry out information exchanges in ways that conform to the antitrust laws.  For example, an information exchange may be lawful if:

  • A neutral third party manages the exchange;
  • The exchange involves information that is relatively old;
  • The information is aggregated to protect the identity of the underlying sources; and
  • Enough sources are aggregated to prevent competitors from linking particular data to an individual source.

WageWatch surveys are fully compliant with all antitrust guidelines including aggregating the results to protect the identity of the participants, ensuring that the age of the data is at least 90 days old, and ensuring that data results contain at least 5 participants.  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.

HUMAN RESOURCES ROLE IN INNOVATION

How can human resources contribute to innovation?  How can we turn new ideas into reality, break old paradigms and step outside of the box with new solutions to old problems?  Innovation may begin with creativity but it is more than an idea — it takes place when great ideas come to fruition and make their mark in the world.  In the past, most businesses focused on continuous improvement of their products and services to maintain a competitive edge.  But in today’s economy, that’s not always enough.

As Human Resource professionals, we are fortunate to be responsible for many areas of an organization that frequently impact and contribute to innovation; including recruitment, performance management, recognition, rewards, training, and employee engagement.  Human Resources can also play a key role in creating an organizational structure and overall culture that fosters and supports innovation.

Recruiting can focus on hiring for innovation by identifying people who can “think outside the box” or have skills and capabilities that lend toward innovation.  Performance management can serve as a valuable tool in the creation of a sustainable culture of innovation.  Performance measures can give consideration as to whether or not employees are given the time and resources to experiment, generate and explore ideas, and make presentations to management.  Rewards can be used to reinforce the importance of innovation and recognition can be used to encourage and inspire employees to innovate and share ideas.   HR’s role in organizational design provides huge potential for enabling innovation.  For example, organizational design can be used to facilitate easier exchange of employees’ ideas across boundaries and functions.

An example of a human resource-driven innovation that used an out-of-the-box idea to improve the recruiting process is La Cantera Resort in San Antonio, TX, a Destination Hotel, they have incorporated an idea made popular by Disney, the Fast PASS. In Disney’s version, guests can avoid the line and use a Fast PASS to get a ticket to ride an attraction at a specified time with limited to no waiting. This helps improve the guest experience, improves wait times, improves communication and enhances the ability to meet the expectation of guests. At Destination Hotels, they have incorporated this concept into their recruitment practices. Special “FAST PASS” cards are given to managers who can spot people in their daily interactions (at grocery stores, restaurants, bars, the mall, etc…) providing exceptional customer service and invite them to consider an employment opening/opportunity with Destination. They can call a specific number and get a “prioritized/guaranteed” in person interview as opposed to filling out an application during certain hours and hoping to a chance to be considered. Like Disney, the approach at Destination Hotels improves the experience for the candidate and the HR function/hiring managers. It speeds up the ability to source the most qualified talent and create a match to open position needs at the resort. Destination competes on innovation.

While HR can have a significant impact on many of the key drivers of innovation, it is a collaborative process and requires many areas to come together in order to succeed.    Executive leaders hold the key to the level and success of innovation in their organization. They control the strategic direction, influence the culture, and directly and indirectly control all organizational practices.   Managers must know how to lead innovative teams, and individuals must know how to apply innovative thinking.  Every department or function must be part of the process.  For example, Information Technology has become an enabler of innovative ideas, but it is also often the starting point for innovative products or services and Finance has a unique opportunity through the budget development to add innovation either as a line in the overall budget or as a percentage of every departmental budget.

Organizations need to develop practices that make it easier to innovate.   For example, at the core of an organization’s  culture should be an acceptance of the need to experiment and understand that this comes with the risk of failure and that failure needs to be seen as a learning experience and an important step in the process.  Culture is definitely key to sustainable innovation.  The mindset and culture of the HR team have an exponential impact and influence on the entire organization.  HR leaders can help enable their organizations to differentiate themselves by understanding the critical importance of innovation today and how their role can contribute by attracting and keeping the most innovative people, constantly improving their skills and creating and enabling a culture of innovation.

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.

DRAMATIC CHANGES FOR PERFORMANCE MANAGEMENT

Organizations are exploring some new and innovative performance management systems in an effort to truly inspire and motivate their teams with some encouraging results. Traditional performance management systems typically set goals related to the business plan, utilize performance appraisals that are too lengthy, redundant, hastily completed to meet deadlines, and often don’t allow employees any real input.  Many HR leaders believe that performance reviews yield inaccurate results due to biased approaches and misleading inputs.  Performance Appraisals are essentially a forced ranking system that can actually be very demotivating.

The traditional systems are beginning to shift to a more effective coaching system that focuses on employee achievement of measurable goals and objectives rather than formalized annual appraisal systems that primarily communicate one-way.  There are many examples of progressive companies that have replaced their traditional performance management systems with a culture of coaching, feedback, development, and high performance. Critical to success is that everyone in a leadership role is trained on how to coach and provide constant performance feedback, which in turn, engages employees and creates a desire to continuously improve.

The goal of managing performance is being replaced with a goal of obtaining the best possible sustainable performance under the current circumstances.   Key elements of this new paradigm include:

  • Simplify the Process:  Train managers on how to coach, give feedback and regularly check in with employees.  Focus on developing employees rather than evaluating and giving them a ‘rating’.  Ask questions that help target what the employee needs, such as, “What skills would you most like to improve on?” or “What can I do to help you?” Review employee progress more frequently making the process less intimidating and more sensitive.
  • Streamline, shorten or completely replace Performance Review forms:  Replace the forms with on-going coaching and feedback.  Feedback must be timely to be meaningful.
  • More agile, relevant, frequent and transparent goal management:  Include employees in the discussion of key performance objectives, ensuring they understand the reasons for the goals and can see how they are linked to organizational goals.  Utilize more short term goals that are easier for employees to derive meaning from what they do every day.  Create achievable goals and regularly monitor employee progress.
  • Address career goals and future training needs:  Include a system that supports follow-up and delivery of the training and career opportunities.  Create a culture where managers can delegate without feeling threatened, knowing they also have opportunity and training for the next career advancement.
  • Eliminate direct correlation between performance rating and compensation:  Make pay adjustments based on a combination of elements such as performance, customer and business impact, skill scarcity and the competitive nature of employees’ positions.

Employees want to perform at their best.  They want to understand the goals and to be motivated.  They want to contribute, be supported, to learn and to have fun.  Management and leaders need to create the conditions needed for a great performance to take place and for business to flourish.  The ideal process for managing performance is one that successfully motivates and supports staff to contribute to the achievement of the goals and objectives of the organization.  A culture that encourages on-going communication and coaching between managers and their employees has many benefits and advantages over traditional Performance Management.

Change can be challenging and demanding.  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.

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.

MOTIVATING EMPLOYEES BY JOB DESIGN

With changing demographics and a more competitive job market, human resources are more challenged than ever before to hire, engage, maintain and keep employees happy and motivated.  Workers want more choice and flexibility in how they approach tasks, for example, more opportunities to work collaboratively.  They look for more opportunities to change duties, for exploration, to learn and to advance in their career in a less linear way.    It is not only desirable but essential for businesses to have motivated employees.  Today many human resource professionals are looking at how to design jobs, work environments, and cultures that motivate employees.

Job specialization is the earliest approach to job design. Job specialization is efficient but leads to boredom and monotony. Early alternatives to job specialization include job rotation, job enlargement, and job enrichment.

Job rotation involves moving employees from job to job at regular intervals. When employees periodically move to different jobs, the monotonous aspects of job specialization can be relieved.

Job enlargement consists of making a job larger in scope by combining additional task activities into each job through expansion

Job enrichment is concerned with designing jobs that include a greater variety of work content, require a higher level of knowledge and skill, give the worker more autonomy and responsibility, and provide the opportunity for personal growth.

Research shows that there are five job components that increase the motivating potential of a job: skill variety, task identity, task significance, autonomy, and feedback.

  • Skills
    • People will be more motivated if they are using a variety of skills in their positions, rather than one thing repeatedly.
  • Tasks
    • Employees are motivated to complete tasks if they identify with them and have seen them through from start to finish.
    • When employees feel that their work is significant to their organization, they are motivated to do well
  • Autonomy
    • Employees like to be able to make decisions and have flexibility in their roles. Most employees will have lowered motivation if they feel they have no freedom or are being micromanaged.
  • Feedback
    • Employees need feedback (both positive and negative) in order to stay motivated.

The quality of life in a total job and work environment is also an important part of a positive and motivating experience for employees.  The elements included in ‘quality of life’ include open communication equitable reward system, employees’ job security and satisfaction, participative management, development of employee skill, etc.  Since a significant amount of one’s life is spent at work, jobs need to provide satisfaction for sustained interest.  Jobs provide employees not only a living but also help in achieving other goals such as economic, social, political and cultural.

The concept of empowerment extends the idea of autonomy.  The idea behind empowerment is that employees have the ability to make decisions and perform their jobs effectively.  Instead of dictating employees roles, companies create an environment where employees thrive, feel motivated, and have the discretion to make decisions about the content and context of their jobs. Empowerment is a contemporary way of motivating employees through job design.

A growing body of research on the relational structures of jobs suggests that interpersonal relationships play a key role in making the work experience important and meaningful to employees.  Interpersonal relationships can often enhance employees’ motivations, opportunities, and resources at work.

Though employees need to have some intrinsic motivation (internal motivation) to complete the tasks assigned to them in their roles, they also need to be motivated by their employers. By designing jobs that encompass all of the core characteristics, you can help increase employee motivation, in turn improving performance.

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, incentive 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.

THE DATA TELLS A STORY

Determining the appropriate salary level is never as simple as we would like. The reason is that despite all the diligent work that goes into salary surveys, the resulting pay data for a given job is always a broad range.  So deciding what precisely to pay an individual takes good judgment that comes with experience.

The challenge in the interpretation of salary survey data is that it requires a combination of good analytics and common sense. The reality is that often a lot of work is required in order to analyze market pay and determine your pay point and pay range. This often involves analyzing several surveys and/or survey reports and considering other factors such as company strategy, payroll budget, and internal equity before landing on an appropriate salary.  As Compensation and HR professionals we have to be able to say, here is the data, here is how it is analyzed, and here are the judgments we made as experienced professionals.

The WageWatch PeerMark ™ report allows our survey participants to build their own competitive sets, select from a list of 300+ job titles, and quickly generate a market variance report for the participant’s local market.  For the more demanding and complex data needs, a WageWatch Consultant can build your custom reports for you that will meet your specific needs. We will work with you to define your report specifications, target market areas, competitive set and any other specifications.

WageWatch compensation consultants are your data partners on whom you can rely on to get the most comparable data from your market, with the expertise to know how and what data to extract from each market or sub-market in order to provide you with survey report(s) containing the best competitive results.  Custom reports solve many compensation problems.  For example you may run into a market area that is heavy with one or two competitors not allowing you to report any data or perhaps the survey market does not contain enough competitors of a similar size and scope that fits your organizational needs.  This is where our compensation consultants can assist having the experience needed to work around some of these challenges and capture your specific needs such as peer groups, industry focus or geographic cut.  This additional data analysis can enhance the overall story that you will have to present back to your executive team.   We can build multi-market competitive sets across multiple locations. These many be niche markets in highly competitive hyper segments or broad multi-city or state benchmarks for management companies entering new markets. Custom reports can also be powerful resources for developing union defense strategies, management and executive job pricing, pricing jobs in rural markets with few competitors, segmenting markets into micro markets, and blending markets into macro markets.

WageWatch compensation consultants can also help you with your analysis of the market data compared to your current salary ranges and incumbent salaries to update your current structure or in creating a whole new structure.  Perhaps you are looking at moving more toward performance-based pay.  We are prepared and experienced to be able to help you with a variety of compensation needs, for example,  analyzing the compensation impact of organizational changes with an internal equity and external competitiveness analysis. Our analysis is full service.  In addition to the compensation review, our consultants can help with FLSA classifications, hybrid jobs, writing job descriptions, mapping new organization charts, and crafting employee communications.

As the economy continues to improve, we expect to see more pressure put on salary budgets and merit increases in order to meet rising demand for talent. Our consultants can work with you to get the balance right on budgeted wage increases and their relationship with structure adjustments.  When wage increases and adjustments are made, often other potential concerns are uncovered such as wage compression and paying out of range. WageWatch consultants are here to offer comprehensive guidance on your structure maintenance and adjustment requirements.

WageWatch salary surveys provide data tools and report statistics for analysts of all experience levels. Please contact WageWatch if you need assistance with interpretation the statistics reported, help building custom reports, or have a need for our wide range of consulting services. For more information on our services and surveys please call WageWatch at 888-330-9243 or contact us online.

 

 

NEW FLSA OVERTIME REGULATIONS ARE IN TURMOIL

In September, 21 states sued the Department of Labor to block implementation of the FLSA overtime regulations slated to go into effect on December 1st of this year.  Separately, over 50 business groups challenged the DOL’s authority to establish a salary test for determining if an employee is or is not exempt from overtime. Those two cases were eventually consolidated.  On November 22nd, federal judge Amos Mazzant, a judge for the eastern district of Texas, appointed by President Barack Obama, entered a nationwide preliminary injunction to stop the implementation of the new overtime regulations. The new regulations would have increased the minimum salary for exempt “white collar” executive, administrative and professional employees from $455 per week to $913 per week, or $47,476 per year.

The Federal Court ruled that Congress intended the EAP exemption to apply to employees doing actual executive, administrative, and professional duties rather than an employee’s salary.  The Court concluded, that the new regulations, which raise the salary threshold significantly would have created “essentially a de facto salary-only test.”  The Court explained, “[t]he [DOL’s] role is to carry out Congress’s intent.  If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

This past Thursday, December 1st, the DOL filed an appeal asking the Fifth Circuit Court of Appeals to overturn the preliminary injunction against its new overtime regulations. Since an appeal in the Fifth Circuit can take a year or more, many labor experts and attorneys expect there will be further legislative or administrative action once the Inauguration occurs and a new Secretary of Labor is in place and this likely will happen well before a final court ruling takes place.

However, many employers have already implemented changes, by either raising exempt employees’ salaries to meet the new threshold or reclassifying employees who are still earning less to nonexempt status.  Employers who have already implemented such changes, may want to leave decisions in place as It would be difficult to take back salary increases.  Employers may want to postpone reclassifications that have not yet been done to give the litigation a chance to play out.  And Employers may want to communicate that there may be future changes depending on Federal Court, Congressional, or Trump administration activities.  Employers shouldn’t assume that the overtime rule will be permanently barred and should have a plan to move forward if necessary in the future.

This said, here are a few possible future scenarios that could unfold:

  • A lame-duck Congress comes up with a compromise bill for President Obama’s signature (not likely);
  • President Elect Trump addresses this after his confirmation by abandoning the Obama administration’s defense of the final rule; and
  • The new administration may introduce legislation seeking a compromise, with a lower, or graduated salary threshold increase, and without the automatic escalator clause.

Regardless of what action the current administration or the new administration take, it is very likely we will see more activity at the state and local government levels. Unions are leading the effort for a $15 minimum wage at the state and local levels. They have had some success in California, Oregon, Washington and New York. As part of that effort, adding a doubling of salary for exempt employees is a logical extension of the unions’ efforts. Why? Because the minimum wage effort impacts exempt employees under FLSA. Exempt employees who are not paid for overtime may see their line employees earning more than they do.

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.

Mindfulness: Embraced by Businesses

In a world where multitasking and information overload are the norm, an old idea, Mindfulness, is becoming increasingly appealing to organizations who are effectively applying it to their businesses.  Mindfulness is training the mind to focus. Our ability to concentrate is seriously compromised the more we multitask. And technology, though useful to us in so many ways has actually impeded our ability to concentrate or to be mindful of what matters moment by moment. If you would like to investigate further for your organization or for yourself, Psychology Today has an overview of the practice

(http://www.psychologytoday.com/basics/mindfulness) on their website.

 

Many Fortune 500 and other organizations are embracing and promoting mindfulness for their workforce.  Business schools are beginning to teach mindfulness and it is included in many MBA programs. In the workplace, mindfulness is a skill that aids concentration, clarity and equanimity.  Present moment awareness keeps your mind from dwelling on the past or obsessing on the future.  Becoming more aware of what is going on around you allows us to be fully focused on the task at hand and more likely to spot opportunities. Mindfulness also makes us more conscious of what is going on within us, helping to identify and remove subconscious thinking that can be obstacles to success. Mindfulness also enhances creativity, innovation, and improves the brain’s ability to process information.  So it is not surprising that more and more corporations are embracing mindfulness as a business practice.

 

To be mindful is to be awake, to be conscious, to be aware and to appreciate the impact of one’s actions. Mindfulness is a mental state achieved by focusing one’s awareness on the present moment, while calmly witnessing one’s thoughts and feelings without judgment.  Mindfulness is a 2,500 year old tradition of Eastern Cultures that now is considered a science of the mind.  Many consider mindfulness to have its origins Buddhism; however, it can be traced back more than 2,500 years ago, when Hindus practiced a range of meditations, which included mindfulness.

 

It may be time to consider mindfulness, as a business skill.  Extensive research has been done over the last 15 years that show mindfulness is linked to psychological and physical, health. It decreases blood pressure, regulates the heart, increases the immune function, and enhances memory.  It essentially, rewires our brain.  The idea that increasing mindfulness may lead to better decision-making deserves attention.

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 .

Independent Contractor or Employee?

If it walks like a duck and talks like a duck, it’s a duck.  In other words, if you are treating the ‘independent contractor’ like an employee by doing things such as providing work materials and office space, designating working hours, providing training and direction regarding how and when to perform the work, then the ‘independent contractor’ is most likely an employee.  Independent contractor is defined by the Fair Labor Standards Act, IRS regulations, and the decisions of some courts.  Many states also have specific independent contractor regulations.  The IRS and many states have adopted common law principles to define an independent contractor. These rules focus primarily on the level of control an employer has over a service or product. For independent contractors, the company can direct or control only the result of the work done, and not the means and methods in getting to the result.

The rules are not always clear-cut to determine the correct status, but generally characteristics of an Independent Contractor include:

  • The work assignment is temporary and typically for a specific project; and
  • The work assignment is not an integral part of the business and is not something typically done by employees.

The Independent Contractor will:

  • Supply his or her own equipment, materials and tools;
  • Pay for their own expenses;
  • Control the hours worked;
  • Determine how and when to perform the work;
  • Retain a degree of control and independence;
  • Operate under a business name and has his/her own employees; and
  • Advertise his/her business’ services and has more than one client.

Some courts and federal agencies use an “economic realities test” which looks at the dependence of the worker on the business.  If a large portion of a worker’s salary is from one specific company, this may qualify them as an employee. Other factors considered are level of skill, integral nature of the work, intent of the parties and payment of social security taxes and benefits.

Misclassification of an individual as an independent contractor may have a number of costly legal consequences such as reimbursement of all wages including overtime, taxes and penalties for federal and state income taxes, social security, Medicare and unemployment, providing employee benefits and workers compensation for any injuries.

There is no set number of factors that makes the worker an employee or an independent contractor.  Also, factors which are relevant in one situation may not be relevant in another.  The best approach is to look at the entire relationship, consider the degree or extent of the right to direct and control the work, and be sure to document all factors used in your determination process.

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.

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.