Managing pay can be tricky. Handled incorrectly, pay can create problems for an employer — everything from the inability to attract the right candidates and losing great employees to the competition to presenteeism (employees who are physically in the workplace but not engaged in their work), employee relations issues, compliance audits, and lawsuits. These outcomes impact productivity. They infect the company culture. And they tarnish the employer brand.

In your role as a trusted advisor to clients who may be struggling with their total compensation programs, you need to be ready to help them determine how to make the right decisions. This requires you to be aware of new trends while also helping clients manage risk by complying with wage and hour rules.

Pay Versus Employee Motivation and Retention

Many employee engagement reports note that pay doesn’t impact motivation as much as other work factors, such as:

  • The quality of the company and its management.
  • Belief in the organization’s products.
  • Alignment with the company’s mission, values, and goals.
  • Ability to make a meaningful contribution.
  • Ability to develop new professional skills.

IBM’s Smarter Workforce Institute’s 2017 study looked at employees’ decisions to leave their jobs and found that the three generations comprising most of today’s workforce would be open to considering new job opportunities for better compensation and benefits: Millennials at 77 percent, Generation X at 78 percent, and Baby Boomers at 70 percent. Those are big numbers, and they shouldn’t be ignored when designing pay plans.

Further, while pay may not be a motivator, it can be a powerful dissatisfier when employees believe that they aren’t being paid correctly for the value they are bringing to the organization, or at the market value of their jobs. Worse yet is the perceived — or real — belief that their pay is lower than what their co-workers are earning. In some markets, this problem is genuine, as companies in hot labor markets struggle with paying new people more than current employees, causing pay compression. Employees do talk and pay information is readily available.

Considering every variable that goes into compensation planning can be complicated. Your clients can start by: setting a compensation strategy to fit their company’s needs and budget; developing compensation programs to fit that strategy, the talent marketplace, and employee demographics; and then administering the compensation program fairly and in compliance with federal, state, and local laws.

Equal Pay Mandates

The Equal Employment Opportunity Commission’s (EEOC) Strategic Enforcement Plan prioritizes enforcing the Equal Pay Act (EPA) to close the pay gap between men and women, and the Trump administration has been silent about changing this direction. This topic is trending, as legislators in more than 40 jurisdictions introduced bills related to equal pay in 2017. California, New York, Massachusetts, and Maryland are setting the pace with laws addressing this issue. These states have set rules that more broadly define the equal pay standard requiring different factors, such as skill, effort, working conditions, and responsibility, in justifying gender pay disparities. These states are also broadening the geographic restrictions for employee pay differentials.

We expect that more states will enact equal pay rules in 2018. Companies should review gender pay differences in their workforce, document the bona fide business reasons for the differences, and correct wage disparities as needed. Permitted differences could include seniority, documented merit performance differences, pay based on quantity or quality of production or sales quotas, or geographic differentials.

Salary History Ban

The issue of pay has traditionally been an inevitable topic of discussion in any job interview. However, in a growing number of places throughout the country, an employer can no longer ask an applicant about his or her salary history. At least 21 states and Washington, D.C., along with several municipalities, have proposed legislation that would prohibit salary history questions. California (effective January 2018), Delaware (effective December 2017), Massachusetts (effective July 2018), and Oregon (effective January 2019) have enacted laws impacting private employers. More bans are expected at both the state and local level.

While the provisions of each law vary, they make it illegal for employers to ask applicants about their current compensation or how they were paid at past jobs. The rationale for these laws stems from the equal pay issue and the premise that pay for the job should be based on the value of the job to the organization, not the pay an applicant might be willing to accept. These laws are designed to reverse the pattern of wage inequality that resulted from past gender bias or discrimination.

For employers, this means:

  • Establishing compensation ranges for open positions and asking applicants if the salary range for the position would meet their compensation expectations.
  • Updating employment applications to remove the salary history information.
  • Training hiring managers and interviewers to avoid asking questions about salary history.

Pay Transparency

Outside of certain industries, the public sector, and unionized environments where pay grades and step increases are common knowledge, historically many employers have had a practice of discouraging employees from openly discussing their compensation. That practice is fast becoming history, due to another notable trend in state legislatures: enacting laws that allow employees to discuss their wages and other forms of compensation with others. Although the provisions of the laws vary, California, Colorado, Connecticut, Delaware, Washington, D.C., Illinois, Louisiana, Maine, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New York, Oregon, and Vermont now have laws in place allowing pay transparency.

In addition to these state laws, Section 7 of the National Labor Relations Act (NLRA) allows employees to engage in pay discussions as “concerted and protected activities for the purpose of collective bargaining or other mutual aid or protection.” During the Obama administration, the National Labor Relations Board (NLRB) broadly interpreted the NLRA’s Section 7 to side with employees’ rights to discuss wages and other terms and conditions of employment. Unless the Trump administration’s NLRB changes direction on this issue, which is not expected, the clear message for employers is to remove any prohibitions of employees discussing pay or working conditions with others.

Be Vigilant

Employee compensation has always been a hot topic, and this year the temperature will continue to rise. Keep abreast of legislative and regulatory changes that impact pay practices to help your clients stay in compliance with the pay laws that are spreading throughout the country.

Now is a good time to suggest that your clients consider conducting pay audits, updating compensation plans, making compensation adjustments where needed, training managers regarding pay strategy and practice, and communicating the company’s compensation strategy and incentive plans to employees.

 

By Laura Kerekes, SPHR, SHRM-SCPz

Originally posted on thinkHR.com

The U.S. Department of Labor has issued compliance guidance for benefit plans, employers and employees, and service providers who are impacted by Hurricane Harvey. The guidance generally provides relief from various ERISA requirements and time limits for entities in the disaster area. This follows the Internal Revenue Service (IRS) announcement extending certain filing dates, including Form 5500.

Key excerpts from the DOL guidance include:

“The Department recognizes that some employers and service providers acting on employers’ behalf, such as payroll processing services, located in identified covered disaster areas will not be able to forward participant payments and withholdings to employee pension benefit plans within the prescribed timeframe. In such instances, the Department will not–solely on the basis of a failure attributable to Hurricane Harvey–seek to enforce the provisions of Title I with respect to a temporary delay in the forwarding of such payments or contributions to an employee pension benefit plan to the extent that affected employers, and service providers, act reasonably, prudently and in the interest of employees to comply as soon as practical under the circumstances….

“With respect to blackout periods related to Hurricane Harvey, the Department will not allege a violation of the blackout notice requirements solely on the basis that a fiduciary did not make the required written determination….

“The Department recognizes that plan participants and beneficiaries may encounter an array of problems due to the hurricane, such as difficulties meeting certain deadlines for filing benefit claims and COBRA elections. The guiding principle for plans must be to act reasonably, prudently and in the interest of the workers and their families who rely on their health plans for their physical and economic well-being. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.”

The DOL also released FAQs for Participants and Beneficiaries Following Hurricane Harvey. The eight-page FAQ covers issues regarding health plan claims, COBRA continuation coverage, and collecting retirement plan benefits.

Originally Published By ThinkHR.com

Dear Ron, Thank you so much for generously supporting [us] and our AIDS walk team this year. It was a lovely foggy Sunday morning in Golden Gate Park, with thousands of folks walking to fight AIDS. It has been a pleasure working with you over the years. You have saved us LOTS of money! I want you to know how much we appreciate all that you do!

- San Francisco, Non-profit organization

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