Volume 1, Issue 3 (July, 2007)

Effective Salary Administration

How to Price a Job

One of the most critical steps to accurate market pricing of a job is selecting the appropriate benchmark job. Below are some general guidelines to consider:

• Benchmark the job, not the person in the job.

• Benchmark based on the job description rather than job title.

• Focus on the essentials of the job description and not small differences.

• Benchmark jobs have simplified descriptions designed to be independent of any employer’s industry, size or location.

• Let scope selection perform its role. Your scope, and not the job, will reflect differences across industries, company sizes and locations.

• Match the essentials closely. A benchmark job description should contain at least 80 percent and no more than 120 percent of the intended job's responsibilities.

• Don't force a match, blend jobs instead.

• Blend jobs judiciously. Price jobs separately first and then try blending them together.
   

Exempt vs. Non-Exempt Status

The term “collective actions” is used to describe FLSA actions brought on behalf of large groups of employees. The most common claim raised in these suits is that non-exempt employees have been classified as exempt and therefore denied the overtime pay to which they are entitled.

Wage and hour collective actions have risen every year from 2001 to 2005. Many of these suits have cost employers huge sums of money. A suit against Wal-Mart settled for $33 million, one against Radio Shack settled for $29.9 million and one against Smith Barney settled for the whopping sum of $98 million.

How to avoid Wage and Hour Litigation:

1. Develop detailed job descriptions.

2. Ensure that employees are actually performing the duties described in those descriptions.

3. Limit the extent to which exempt employees perform non-exempt duties
    

Federal Minimum Wage Goes Up On July 24, 2007

On May 25th, 2007 President Bush signed a bill that raised the federal minimum wage to $5.85 per hour effective on July 24, 2007 (with future increases in the following two years).  Employers in those states that have already raised the minimum wage above this level don't have to make any changes in the compensation rate for their employees.  Florida’s minimum wage was raised to $6.67 last January 1, 2007.

However, in July of 2008 when the second federal minimum wage increase takes effect, employers in any state that doesn't require pay of least $6.55 per hour will have to make changes to pay rates to keep in compliance.  In July of 2009, the federal rate rises to $7.25 per hour.