Chpt 12

Compensable Factors

5 characteristics of a job that the organization values and chooses to pay for. 1 - Experience 2 - Education 3 - Complexity 4 - Working conditions 5 - Responsibility

Equal Employment Opportunity

Employers must not base differences in pay on an employee's age, sex, race, or other protected status.

Labor Markets

Organizations must compete to obtain human resources - Competing for labor establishes minimum an organization must pay to hire an employee for a particular job.

Red-circle rate

Pay at a rate that falls abovepay range for the job.

Green-circle rate

Pay at a rate that falls belowpay range for the job.

Prevailing Wages

Two federal laws govern pay policies of federal contractors: - Davis-Bacon Act of 1931 - Walsh-Healy Public Contracts Act of 1936 Under these laws, federal contractors must pay their employees at rates at least equal to the prevailing wages in the area.

FLSA overtime regulations (Dec. 1, 2016)

- Businesses required to review their pay levels and jobs - Employees earning up to $23,660 per year ($455/week) automatically entitled to overtime pay (old rule) - December 1, 2016 anybody making a salary of less than $47,476 ($913 per week) will automatically qualify for overtime pay when they work more than 40 hours a week (new rule) - Employees who earn at least $134,004 (high compensated employees) per year and perform some executive, professional, or administrative job duties are automatically exempt from overtime provisions - The new Analysis will be in-between $47,476 and $134,004

Child Labor

- Children aged 16 and 17 may not be employed in hazardous occupations defined by U.S. Department of Labor. - Children aged 14 and 15 may work only outside school hours, in jobs defined as nonhazardous, and for limited time periods. - A child under age 14 may not be employed in any work associated with interstate commerce. - Exemptions include baby-sitting, acting, and delivering newspapers.

Legal Requirements for Pay

- Equal employment opportunity - Minimum wages - Overtime pay - Prevailing wages for federal contractors

Minimum Wage

- FLSA establishes a minimum wage of: $7.25 per hour (proposed increase $15.00 per hour). - FLSA also permits a lower "training wage" paid to workers under age of 20 for up to 90 days approximately 85 % of minimum wage.

Skill-Based Pay Systems

- Pay structures that set pay according to employees'levels of skill or knowledge and what they are capable of doing. - Appropriate where changing technology requires employees to continually widen and deepen their knowledge.

Pay Level: Deciding What to Pay

-Pay at rate set by market -Pay at rate above market -Pay at rate below market

Benchmarking

A procedure in which an organization comparesits own practices against those of successful competitors - Pay surveys - Trade and industry groups - Professional groups Gathered by: •Bureau of Labor Statistics (BLS) •Society for Human Resource Management (SHRM)

Pay ranges

A set of possible pay ratesdefined by a minimum, maximum, and midpoint of pay for employees holding a particularjobor a job within a particular paygrade.

Pay differential

Adjustment to a pay rate to reflect differences in working conditions or labor markets.

Job Evaluation

Administrative procedure for measuring relative internal worth of the organization's jobs.

Nonexempt employees

Employees covered by FLSA requirements for overtime pay

The Fair Labor Standards Act (FLSA)

Federal law that establishes a minimum wage and requirements for overtime pay and child labor.

Product Markets

Includes organizations that offer competing goods and services. - Organizations compete on quality, service, and price. - Cost of labor is a significant part of an organization's costs.

Key Jobs

Jobs that have relatively stable content and are common among many organizations. - Organizations can make the process of creating the job and pay structures more practical by defining. - Research for creating the pay structure is limited

Exempt employees

Managers, outside salespeople, and other employees not covered by FLSA requirement for overtime pay.

Overtime Pay

Rate under FLSA is 1½ times employee's usual hourly rate, including any bonuses, and piece-rate payments

Delayering

Reducing number of levels in organization's job structure. - More assignments are combined into a single layer called broadbands. - More emphasis on acquiring experience, rather than promotions.

Pay During Military Duty

Uniformed Services Employment and Reemployment Rights Act (USERRA) - Retain reemployment rights to five years - Reinstated to the job they would have attained had they continued in employment