Compensation Day 23 Flashcards
Government regulation affects pay structure in the areas of (5)
Equal employment opportunity Minimum wage Pay for overtime Child labor Prevailing wages for federal contractors
Federal law that establishes a minimum wage and requirements for overtime pay and child labor
Fair Labor Standards Act (FLSA)
The lowest amount that employers may up under the federal or state law, stated as an amount of pay per hour
Minimum wage
Exempt vs nonexempt employees: exempt
Managers, outside salespeople, and other employees not covered by the FLSA requirement for overtime pay
Depends on job responsibility, salary level above $455 per week, and salary basis
Includes executives, administrators, and professional occupations
Exempt vs nonexempt employees: nonexempt
Employees covered by the FLSA requirements for overtime pay
This is required whether or not the employer specifically asked or expected the employee to work more than 40 hours
Overtime pay
Overtime rate is how many times the employees usual hourly rate?
1.5
Child labor laws children aged 16 and 17
May not be employed in hazardous occupations defined by the US dept of labor
Mining, meatpacking, factories
Child labor laws children aged 14 and 15
May work only outside school hours, in jobs defined as non hazardous, and for limited time periods
Child labor laws children under age 14
May not be employed in any work associated with interstate commerce
Exemptions include baby sitting, acting, and delivering newspapers
Under these laws, federal contractor must pay their employees at rates at least equal to the prevailing wages in the area
Prevailing wage
Prevailing wages are based on what percent of the local labor force?
30%
Two federal laws govern pay policies of federal contractors
Davis-bacon act of 1931
Walsh-Healy public contracts act of 1936
This act covers construction contractors that receive more than $2000 in federal money
Davis-Bacon Act of 1931
This act covers all government contractors receiving $10,000 or more in federal money
Walsh-Healy Public Contracts Act of 1936
A procedure in which an organization compares its own practices against those of successful competitors
Benchmarking
Benchmarking (6 ways)
Conduct pay surveys - internal vs external Trade and industry groups Professional groups Bureau of Labor Statistics (BLS) Society for Human Resource Management American Management Association
This theory states that employees care about their pay relative to what others are earning and that these feelings are based on what employees perceive
Equity theory
Organizations must take into account (8) on Pay Decisions
Fairness Pay structure Job structure Pay level Pay grades Pay ranges Pay differentials Alternative pay structures
This reflects decisions about the relative value of each job (job structure) and how much to pay (pay level). It should reflect what the organization knows about market forces, unique goals, and relative contribution of each job towards goals
Pay structure
The organizations pay structure should reflect what the organization knows about (3)
Market forces
Unique goals
Relative contribution of each job towards goals
An internal structure showing the relative contribution of its various jobs; the relative value of each job
Job structure
An administrative procedure for measuring the relative internal worth of the organization’s jobs
Job evaluation
Job evaluation is based on
Compensable factors, or characteristics of the job that the organization values and will pay for
Job analysis helps identify (3)
Job difficulty, demands, and required qualifications
Average amount the organization pays for a particular job including wages, salaries, and bonuses
Pay level
Pay level includes a number of different factors (3)
Hourly wage vs salary
Piecework rate
Bonuses
Sets of jobs having similar worth or content, grouped together to establish rates of pay
Pay grades
Drawback of pay grades
Not all jobs in each grade will have the same number of job evaluation points (level of importance)
A set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job or a job within a particular pay grade
Widest in high level jobs, as they have more effect on organizational performance
Pay ranges
Adjustment to pay rate to reflect differences in working conditions or labor markets
Pay differential
This is the organization’s formal policy on pay
Pay structure
The ratio of average pay to the midpoint of the pay range
Compa-Ratio (CR)
>1 = average is above midpoint
<1 = average is below the midpoint
Reducing the number of levels in the organization’s job structure
Delayering
Delayering: more assignments are combined into a single layer called
Broad bands
Pay structures that set pay according to the employees’ level of skill or knowledge and what they are capable of doing
Skill-based pay systems
This is appropriate in organizations where changing technology requires employees to continually widen and deepen their knowledge
Skill-based pay systems
Law that ensures employers make jobs available for active military when they return for up to 5 years
Uniformed services employment and reemployment rights act (USERRA)
Equity theory: if employees see their pay as equitable,
Then their attitudes and behavior continue unchanged
Equity theory: if employees see themselves as receiving an advantage,
Then they usually rethink the situation to see it as merely equitable
Equity theory: if employees conclude that they are under-rewarded,
Then they are likely to make up the difference by stealing, reducing effort, or withdrawal
