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COMPENSABLE TIME

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

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

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

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

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

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

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

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

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

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

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

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

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives and that your pay practices are fair, equitable and non-discriminatory. We can provide your business with compensation surveys and salary reports to help you establish a budget for your merit pay program, including bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports, and other services, call 480-237-6130 or contact us online.

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.

Aligning Compensation with Company Culture

Many organizations today are focusing on their company’s culture including determining their culture, deciding what it should be, aligning with strategic goals and transitioning to the desired culture.  Culture is important because it reinforces the values in the organization, which in turn shapes team members behavior.  There are many success stories of companies with cultures that are aligned to their business goals including Google, Zappos, and Patagonia.  These companies have not only developed a culture that supports their business, but have fully embraced their culture.

Organizational culture is the collective behavior of the people who are part of the organization and has important effects on the morale and motivation of the organizational members.  It includes the values, norms, systems, beliefs, attitudes and habits of the organization and affects the interactions of the employees with each other, and with customers.  Even before you define it, you know it is there and that it has an impact on your business. This is why it is so important to internalize the culture and understanding when company activities are in sync or not with the culture.

Once the company values and desired culture are defined, compensation can support and help drive the values and corporate culture.  It is important that the role of compensation in an organization and the compensation strategy are also defined.  For example, where does the organization want to set pay levels in comparison to the competitive market?  Perhaps the organization’s culture is strong on training and developing its employees, acknowledging their successes and offering advancement opportunities. This in turn may allow the organization to set lower pay levels than what is paid in the market.  Of course, when recruiting it is important to align the compensation strategy to support the values of the culture through highlighting performance management, performance appraisals and the goal setting process for each team member. 

Once values, business objectives and desired behaviors are determined then compensation plans can be put in place to support the culture.  For example, if the business objective is innovation and the desired behavior is risk-taking, then short term incentives may be the compensation strategy.  If the goal is for a highly trained workforce and the behavior is learning and upgrading skills, then skill or competency based pay may be the compensation strategy.

Corporate culture is about people’s behaviors – how goals are accomplished – so to establish a culture that drives company success, organizations should link a significant component of their compensation systems to behaviors.

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 .

 

 

Compensation Committees

Compensation committees are an appointed group of individuals that have corporate governance over compensation and benefit programs for executives and company officers. The committee is typically chaired by the CEO and composed of both inside management directors and outside independent directors. Their work includes determining the types of pay plans, the amount of compensation and the performance measures that the executives will be upheld to in regards to the calculation of incentives.

Compensation committees play a strategic role within the business by aligning company performance and executive rewards. Individuals within the committee must create a compressive program, with the aid of compensation surveys and consultants, which motivates executives to achieve the overall goals and objectives of the company within their own positions. High performance is best achieved through the implementation of a strategic merit pay program, short and long term incentive plans including stock awards, retirement, and executive perquisites.

In addition to strategy, compensation committees also play an administrative role. They are responsible for completing studies, evaluating alternative compensation plans and outlining the compensation package. Compensation Committees often times have oversight over complex human resources issues such as equal opportunity and pay, executive succession planning, and director evaluation issues. How much oversight Compensation Committee has depends on many factors including composition of the committee, management engagement, corporate culture, and regulatory environment.

Over the years, executive compensation has become a rather large issue in the media. There are numerous media watchdogs that have the ability to relay information to the public more quickly than ever before. In addition to increased media attention, executive compensation has also seen tighter government regulation. Committees must accurately address the expectations of board members and investors. To keep investors happy, the executives must stay motivated to achieve the established business goals and objectives. Therefore, committees have an extremely important role in designing merit pay programs.

An effective executive compensation program will include performance evaluation that is both measurable and well communicated. The rewards for delivering results need to be meaningful to executives and competitive with what other businesses in the marketplace are offering. At WageWatch, our Executive Compensation Survey and Compensation Consultants can you’re your Compensation Committee to establish a budget for salary changes, benefits and merit pay, including any bonuses or incentives. We have the experience and capability to collect data for compensation surveys, salary reports and other studies in a wide variety of industries. To learn more about how our compensation surveys can help you to develop effective and competitive compensation strategy, please call WageWatch at 888-330-9246 or contact us online.

 

Best Practices: Balancing Internal and External Pay Equity

Whether in the context of real estate, common stock, equipment or wages, equity is a term that relates value between different choices, opportunities or investments. Studies into organizational behavior theorize that employees are continuously monitoring and evaluating their work and pay against those of their peers. Perceived unfairness can result in severe production problems.

In order for a business to operate effectively, the company needs to develop a compensation strategy that achieves the two goals of paying wages considered fair to employees, while providing a financial return on the investment for the employer.  Wage equity has two approaches. The first is externally driven by market forces. The second is an internal focus, driven by the employer’s valuation of the job.

Using market pricing to establish wages and salaries is called market based pay. WageWatch has found that market based pay is the best practice approach to designing compensation policy in competitive market segments such as the hospitality, healthcare, and not-for-profit. Every WageWatch salary survey is a market based strategy. Market based pay systems benefit from being inherently empirical, built from research, through surveys, reporting what similar jobs are paid in the organizations that one competes with in the labor market.

Committing to a market base pay compensation structure means that employees will be paid at a competitive wage when compared with rates offered to people in similar positions in peer organizations. The labor market, ruled by supply and demand, drives this approach. The WageWatch PeerMark ™ Survey and online report building tool is designed for custom selection of competitors from which to accurately benchmark job titles. Wage and percentile variances illustrate where you are positioned in the marketplace.

External equity is one side of the coin. There is also the employer’s perception of fairness called internal equity. Where external equity is a measure of market competitiveness forming its basis on job functions and duties, internal equity is a measure of internal worth with a basis in job autonomy and responsibility. If you have multiple incumbents in the same job title who are paid differently, the differences in pay are an expression of internal equity.

We analyze internal equity in a way similar to external market analysis in that we determine worth relative to benchmarked job titles, but different in that the benchmarks are internally established. Internal benchmarks are particularly useful in evaluating both unique and hybrid job titles for which external benchmarks do no exist. Variance analysis here looks inward at wage compression, organization structure, reporting relationships, and job families.

Managing external and internal equity is a dynamic process requiring human resources to stay vigilant on changes in market conditions and business demands. The market based pay approach to compensation gives the influence of the external market on wages precedence over internal equity. The WageWatch PeerMark ™ Salary Survey reports the most current data available which forms the basis of the external analysis. However, since both approaches have the aligned goals of attracting and retaining a talented workforce, the WageWatch Compensation Consulting Team is available to conduct internal equity audits to address employer concerns and add creditability to pay practices.

Posted in Benefits & Compensation on December 20th, 2012 · Comments Off on Best Practices: Balancing Internal and External Pay Equity

The Impact of the Affordable Care Act on Business

The Affordable Care Act is already causing much confusion for American companies as well as for the general public. The law, as passed, was over 2,500 pages long and will require thousands of additional pages of regulatory policy in order to be enacted.  As we enter the year 2013, there will be many more changes to healthcare as the new law and the regulatory policies surrounding it take effect. As the provider of employee benefits, business owners need to fully understand the impact that the Affordable Care Act will have on their business and their employees over the next few years.

The professionals at WageWatch would like to share the following refresher on some of the most important policies within the Affordable Care Act:

1. Small business owners will receive a tax credit on their contribution to employee insurance policies. For businesses with less than 10 employees, each with average wages under $25,000, they will receive a 50 percent tax credit on their contribution. These tax credits apply to all small businesses up to 50 employees with average wages of $50,000, although the credit is reduced on a sliding scale depending on the businesses size and average salary.

2. Beginning in the year 2018, the Affordable Care Act will impose a 35 percent tax on employer provided health insurance plans that exceed $10,200 for individual coverage and $27,500 for coverage of a family. The idea behind this policy is that business owners will aim to avoid expensive insurance policies known as Cadillac Plans, and insurance companies will be forced to modify coverage with an eye to keeping costs down.

3. If you are a small business with 51 or more full time employees, you will be fined $2,000 per employee, excluding the first 30 employees, if you do not offer insurance for employees that work an average of 30 or more hours each week.  For small businesses with 50 or fewer employees, there is no penalty. Small businesses of all sizes are also not required to provide insurance for part-time employees.

4. Business owners must offer insurance that is certified affordable to employees. The premium for each employee’s plan cannot exceed 9.5 percent of their total household income. If the insurance coverage doesn’t meet the affordability law, employees should be offered tax credits to purchase insurance on their own. Business owners will then have to pay whichever is less: $3,000 per employee that receives the credit or $2,000 per employee, excluding the first 30 workers.

5. Businesses with less than 100 employees that work an average of 25 or more hours per week are eligible for grants to start wellness programs. These programs encourage employees to take control of their health by living more healthy lifestyles, which helps to prevent harmful health conditions down the road.

It is clear from just the five points above, that much is still to be determined before implementation can take effect. Please stay tuned as we will continue to provide you with updates on ACA as more information becomes available.

The experts at WageWatch want you to know how important it is to be aware of the new policies under the Affordable Care Act and their effect on small businesses. Employers need to properly plan for the future by developing accurate budgets that take the changing costs of healthcare benefits into consideration for the year 2013 and beyond. For assistance with your budget, WageWatch offers cost-effective reports, including salary, wages and benefits survey data. To learn more about the services provided by WageWatch, please call 480-237-6130 or contact us online.

 

Posted in Regulatory & Legal Updates on December 12th, 2012 · Comments Off on The Impact of the Affordable Care Act on Business

Budgeting for the 2013 Wage Forecast

Budgeting is a key management function that occurs every year in your organization. The budgeting process involves the systematic collection of information and data so that the financial resources needed to support an organization’s objectives can be reasonably estimated. The biggest challenge to developing a budget is trying to meet the 2013 wage forecast. Typically, senior management will forecast sales as well as the operational and capital expenses necessary to support their business goal and objectives.

In today’s marketplace, consumers are looking for companies who are innovative and offer top notch customer service. Because consumers are looking for the very best service in addition to great products, it’s important for a business to invest in its employees, as they are the most valuable resource to making the business a success. Remember, employees are the largest contributor to a business’ success in today’s marketplace.

During the budgeting process, senior management may be quick to cut your funding unless you can demonstrate how important the human resources department is to achieving the annual goals of the business using the 2013 wage forecast; and demonstrate to them how each of your department’s functions contribute to achieving the requisite ROI.

From a human capital perspective, the data needed to develop a new budget for the 2013 wage forecast include the following:

– number of employees projected for next year;

– new benefits/programs planned;

– estimated wage and benefits cost increases;

– projected turnover rate;

– actual costs incurred in the current year;

– other changes in business objectives and strategy; and

– regulatory changes that may impact employee expenses.

When developing your next budget, keep these proven budgeting tips in mind:

1.       Human Resources is Essential to Success

Make the connection between human resources and a company’s goals. Senior executives may not always see this, so make sure they understand how important the human resources department is to achieving success.

2.       Demonstrate Return on Investment

Have spreadsheets, done meticulously, to show how every dollar invested in the departments within human resources will pay out to other areas of the business. Also be sure to detail profitability.

3.       Showcase Value of Added Line Items

Show how programs, such as an employee assistance program, create value and save money in the long run.

4.       Consider Including an Unimportant Project or Program

Including a project that is unimportant that you can remove from your budget during negotiations with senior management. It will show them that you are willing to take cuts in some areas and are a team player.

5.       Get Finance Onboard

Meet with the finance department early in the budgeting process, so you have a teammate in the battle with executives. Outline the budget for them and make it clear that good human capital planning can help the business achieve its goals.

6.       Know your budget

No one can understand your budget better than you. When the budget committee asks questions, you need to know them without having to search for the answers. Be sure to utilize a 2013 wage forecast to ensure your organization is properly aligning its budget with current market value.

7.       Start Early

Every department likely will be presenting their budgets to senior management, so make sure that you aren’t the last. Plan to be heard early in the budget meetings, before discretionary funding is allocated.

Using the above tips will help you prepare a better budget for your human resources department that is in line with the 2013 wage forecast, which will benefit your organization by furthering its business objectives. WageWatch offers cost-effective salary and compensation survey reports that will help you with budget planning by providing important information such as competitive salary ranges, turnover rates for key positions and employee benefit packages. To learn more about our services, please call us at 480-237-6130 or contact us online.

Posted in Benefits & Compensation on September 12th, 2012 · Comments Off on Budgeting for the 2013 Wage Forecast