Chapter 17 - Government and legal issues in compensation

Types of discrimination

Access discrimination Valuation discrimination

Supply

Affects labor supply through legislation. Licensing requirements restricts labor supply. Immigration policy also restricts labor supply. Early legislation was basic protection, shifting to equality in the 1960's

A proactive compensation manager can

Join professional associations - to stay informed on emerging issues, - to act in concert to inform and influence public and legislative opinion. Constantly review compensation practices and their results. - Should consult with legal counsel.

Living Wage

Minimum wage tailored to living costs at local levels. Popular, backed by unions and churches. Speculated objective is to reduce cost savings from outsourcing.

Disparate impact

Practices that have a differential effect on members of protected groups Are illegal, unless the differences are work-related

Employers must pay

Social Security, unemployment and workers compensation taxes on wages and salaries. Unless the worker is an independent contractor.

For an employer to support a claim of unequal work, the following must be met

The effort/skill/responsibility must be substantially greater in one of the jobs. Tasks with the extra effort/skill/responsibility must consume a significant amount of time for all employees' wages in question. Extra effort/skill/responsibility must have a value commensurate with the pay differential

Government and Legal Issues in Compensation

The end of paying different wages based on general sociological factors - was the aim of the civil rights movement and further legislation. Compliance and fairness are continuing compensation objectives.

Type of relationship

Written contracts describing the relationship Whether or not the business provides the worker with employee-type benefits The permanency of the relationship The extent to which services performed by the worker are a key aspect of the business

Companies respond by

altering their practices, defending their practices before the courts, or lobbying for legislative change

Legislative Process

begins when a problem is identified and corrective legislation is proposed, then passed into law

Minimum Wage

Provides an income floor for workers in society's least productive jobs. Higher rate prevails if state and federal laws cover the same jobs.

Financial control

The extent to which the worker has unreimbursed business expenses The extent of the worker's investment The extent to which the worker makes his or her services available to the relevant market How the business pays the worker The extent to which the worker can realize a profit or loss

Valuation discrimination

looks at the pay women and minorities receive for the jobs they perform. - Hinges on equal pay for equal work

Reverse" discrimination

when men receive less than women when adjusted

Employee or Independent Contractor: Internal Revenue Service Tests

- Behavioral control - Financial control - Type of relationship

Exemption for executive and administrative employees under FLSA

- Executive - Administrative - Professional - Computer Employee - Outside Sales - Other: + Highly compensated employees who earn $100,000/year are exempt + Blue-collar workers and first responders are not exempt + Must comply with state laws if they are more strict than federal law.

Behavioral control

- Whether the business has a right to control how a task is done, includes Instructions and training that the business gives to the worker

Equal Pay Act of 1963

- forbids wage discrimination on the basis of gender if performing equal work in the same firm. - Jobs are considered equal if requiring equal skill, effort, and responsibility, performed under the same conditions. - Pay differences legal if affirmative defense: Seniority, merit or quality of performance, quality or quantity of production, or some factor other than sex

Fair Labor Standards Act of 1938 (FLSA)

Covers all employees of companies engaged in interstate commerce or in the production of goods for interstate commerce. Major provisions include: minimum wage, hours of work, and child labor. Records must be kept of employees, their hours worked, and their pay.

Disparate treatment

Disparate or unequal treatment applies different standards to different employees

Two theories of discrimination behavior

Disparate treatment. Disparate impact

The Worker Economic Opportunity Act

exempts stock options and bonuses from overtime pay calculations

Governments' usual interests

fair pay, safety nets for the unemployed, protecting employees from exploitation

Overtime and Hours of Work

FLSA requires pay at one-and-a-half times standard pay for more than 40 hours/week.

Demand

Federal government employs 2.73 million. State and local many times that. Overall, government employs 16% of U.S. labor force. Indirectly affects labor demand through purchases and policy

Title VII of the Civil Rights Act of 1964 and Related Laws

Title VII prohibits discrimination. ADEA and ADA also prohibit discrimination based on age and disability, respectively. The Lilly Ledbetter Fair Pay Act increases compliance challenges.

Child Labor

Under 18 cannot work hazardous jobs. Under 16 cannot work in jobs involving interstate commerce, except for a parent.

Changes in minimum wage

directly effects workers and indirectly raises everyone's base pay, the spillover effect. Employers must comply if the wage is raised, experts fear this will decrease labor demand.

Access discrimination

is the denial of particular jobs, promotions or training opportunities to qualified women or minorities

Laws are enforced by agencies through

rulings, regulations, inspections, and investigations

Factors for unequal pay, other than sex

shift differentials or temporary assignments, bona fide training programs, differences based on ability, training, or experience, other reasons of 'business necessity'.

The Portal-to-Portal Act declares

time spent on activities before beginning the 'principle activity' is not compensable