Should You Still Be Asking Candidates for Their Salary History?

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This scenario may sound familiar—you are anxiously searching for a new position and filling out an online job application for your dream role, when a required question appears: ‘What is your current salary?’. Or worse, you are at an in-person interview that seems to be going great when an interviewer asks you what you currently earn.
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5 Ways to Make Compensation Reports Work for You

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Unless you are the Compensation Specialist in your HR Department, chances are you aren’t exactly thrilled when a compensation project comes across your desk. In the abstract, the idea of paging through hundreds of pages of compensation data tables or searching through complex (expensive) compensation databases can seem like an arduous and fruitless task.
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Is Your Compensation Data Reliable?

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Is your Compensation Data Reliable?

Compensation data is an essential element in organizations' efforts to competitively recruit and retain top talent. This data is used to ensure market competitiveness in employment offers, and provides a foundation for complete compensation strategy reviews. Be careful about the data you use for compensation decisions. It should come from credible compensation surveys.
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Highly Compensated Employee Exemption: The Other FLSA Exemption

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If you are like most employers in Northeast Ohio, as soon as the FLSA Final Rule was published back in May, your first step was to take a look at those employees on your payroll that make less than $47,476.

Embarking on this fact finding mission is a great place to start, but while employers are scanning their payroll records, there are two other dollar figures that are also worth a quick look to ensure full compliance with the Final Rule come December 1, 2016.

Although far less common than the Standard Salary Level change for Executive, Administrative, and Professional employees (EAP), employers will also need to assess the exempt status of any employees that fall under the “Highly Compensated Employee” (HCE) exemption.

How do I know if I have a “Highly Compensated Employee” (HCE)?

Currently, the dollar amount for the HCE is set at $100,000 annually, but under the new regulations this figure is increasing to $134,004 annually. However, as with the Standard Exemption, compensation alone does not determine the appropriate classification for an employee. The primary difference between the EAP exemption and the HCE exemption, apart from the salary cap, is the duties test itself.

For the HCE’s a “minimal duties” test is applied, which states—per the DOL’s own fact sheet on HCEs—that the minimum duties test is met if, “the employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee”.

While you may have many employees that meet the salary threshold, you may not have any employees that need to be categorized as HCEs. Instead, based on the job duties assigned to most of your employees making over the HCE salary threshold, these employees probably meet more than enough of the duties test to qualify as exempt under the EAP exemption. Again, given the six-figure salary number, in these cases, these individuals are probably more appropriately classified as “Executive” and therefore already fall under the EAP exemption.

What does the new Final Rule change for my HCEs?

Changes to employee classification resulting from the new compensation assessment for HCEs are likely mostly administrative in nature, but should still be reviewed in order to remain compliant. The only major change is the increased figure of $134,004. Also, keep in mind that these employees will also need to meet the new Standard Exemption level of $913 weekly in base salary (this can be in the form of either a set salary or fee per the regulations).

The requirement to meet the Standard Exemption level is no different, but the dollar amount itself has increased to fit the Final Rule. The rest, a minimum of $86,528 to be exact, would then come in the form of commissions and other nondiscretionary compensation/bonuses (also the same rule as before).

In addition, the HCE threshold will automatically update every three years to a level that meets the 90th percentile of annual earnings of full-time salaried workers nationally.

So who does this really impact?

Per initial estimates the changes to the HCE exemption will impact about 36,000 employees (in contrast an estimated 4.6 million workers will be impacted by the change to the Standard Exemption Salary increase) Again, the key numbers to look at here are any employees that fall between $100,000 and $134,004 annually.

As an example, if an exempt employee is currently making $120,000 annually and upon review of their job duties, does NOT fully meet the duties test for EAP employees, (and the employer chose not to increase their compensation to meet the new $134,004 threshold or restructure the makeup of their total compensation package to get to this number—there are lots of options!) then this individual’s status would need to change to non-exempt.

Disclaimer: ERC does not provide qualified legal opinions. Information obtained through the site and services should not be relied upon or considered a substitute for legal advice. The information ERC provides is for general employer use and not necessarily for individual application. ERC recommends that you consult legal counsel for workplace matters.

ERC Training provides FLSA Training which provides a high-level review of the law's elements and requirements.

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The Anatomy of a Compensation Survey (And Why It Matters)

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The Anatomy of a Compensation Survey

Whether your organization is looking to market price a brand new position for a job posting, make an offer to a potential new employee, overhaul your entire salary range structure, check to see if your wages are keeping pace in your industry, or simply trying to stay true to your compensation philosophy, there is one tool that is indispensible—the compensation survey.
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7 Things You Might Not Know About Salary Survey Data

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7 Things You Might Not Know About Salary Survey Data

Being a well-versed salary survey user is an important part of managing employee compensation at your organization. After all, salary surveys are the leading source for setting pay rates.

What data should you use, and what data shouldn't you use? Why is some data lower and some data higher? Should you do a custom survey for better data? If you can't find a given job in a survey, is it okay to use internet or recruiting firm data? How many sources should you use? Here are the answers to these questions and more that we routinely get asked by employers—7 things you may not know about salary survey data.

1. Government data is conservative.

The Bureau of Labor Statistics is a great, reliable resource for salary benchmarking, but compensation analysts find it to be conservative when compared to other compensation data sources. This is because of the time frame in which it is captured, the types of organizations surveyed, and variables covered.

2. Custom salary surveys are less reliable.

Conducting a custom survey for a niche job is commonly believed to be more targeted and accurate than a larger salary survey, however these surveys tend to have lower sample sizes than expected and are not replicated regularly. Custom surveys can be good options for niche jobs and industries, but be aware of their limitations. They certainly aren't always the best option.

3. Internet comp data is generally invalid.

Not only are internet resources for comp data indefensible, but their sources can’t be verified. Research has found that these sources are highly inaccurate and comp experts raise serious questions about the data's validity. Be wary of any data found on the internet that does not publish participant names, demographics, effective dates of data, and sample sizes.

4. Use recruiting firm and job board data with caution.

Data published by recruiting firms and individual employee data (such as from job boards) tend to not be as reliable sources of information as others since they often report inflated pay rates. This information is not a good indicator of how much a job is actually paid.

5. Choosing the right survey makes a difference.

All compensation surveys cater to a certain audience. Make sure that audience fits your's. If a survey contains very large employers on a national scope that you don't compete with, it's probably not a good survey to choose for benchmarking. The wrong survey source can lead to higher or lower data, so always look at the participant list and demographics.

6. Salary data sources are shrinking.

The number of third-parties offering salary data is shrinking which means that employers have fewer sources to select from for their compensation data, though the strong ones still remain. As a result, it’s critically important that organizations support and participate in compensation surveys they value so that valid and reliable information continues to be available.

7. The magic number is “3.”

Ever wonder how many sources you need to make a good pay decision? Some sources say 2, some say 5. Comp experts agree that reliable pay decisions should result from 3 separate sources of salary survey information. Choose three surveys that make the most sense for your analyses.

To make good pay decisions, you need quality data and multiple sources of it. Reliable salary data is tough to come by these days, so be careful about what you use.