An Internal Rating System for Base Pay: Is it Necessary?

Let’s face it, in today’s time, with the EEOC and the OFCCP adopting more sophisticated technologies to ensure best practices, organizations need to be able to ensure fair pay by adopting an internal job rating system. In addition, market data is becoming less reliable every day so are you going to use external comparisons alone to determine the cost of your largest expense, compensation?

The Paycheck Fairness Act has already been passed through the U.S. House, now it is lingering in the Senate.

The Paycheck Fairness Act has already been passed through the U.S. House, now it is lingering in the Senate. The Paycheck Fairness Act has resulted from years of legislation being passed to eliminate the gender gap. However, today women are still being paid approximately 77 cents of every dollar being paid to men. Now is the time to ensure that equal pay is given for equal work. If you do not have a structure in place that can determine comparable worth at your organization, there has never been a better time to look at such tools. When looking for a system, ensure that it can perform the following:

Easy to read analyses for pay equity.

An evaluation system based on

Salary ranges are necessary to guide pay at organizations.

Complimentary article:

Similar to pavement markings that drivers use to guide them while in motion on the road, salary ranges are necessary to guide pay at organizations. Salary ranges are the boundaries for compensation, and yet, you would be amazed how many organizations do not have them in place. Salary ranges that are fair and equitable can assist in many aspects. Assigning starting pay for a position, moving an employee through a job allowing them opportunities to earn more pay and using the different quartiles to figure out what would be the best way to allocate merit pay are three ways that these boundaries can be a huge benefit for companies. The white paper “Salary Range Boundaries” is below. If you do not have a structure in place or if you feel it is time to review your salary ranges, this is a perfect time.

Download “Salary Range Boundaries”
Tips and Tools – Reliable Market Data

Market data is becoming a hot topic as compensation management is moving to the front burner for many organizations. We released an article earlier in the year, “Reliable Market Data – Does it Exist and Where?” In a recent newsletter that was released by World at Work, they released a related article not only addressing reliable market data but also offering tips on how to determine if the information is accurate. If you would like to learn how to identify bad data, please download the article below, “Salary Data Red Alert: Do You Know Where Your Compensation Data Came From?” written by Pawan Singh.

Delivering automated solutions as a Software-as-a-Service (SaaS) model is a direction that many organizations are moving towards.

DBSquared Feature: The Paycheck Fairness Act

On July 20, 2010, President Obama had the following to say about the Paycheck Fairness Act. We cannot do this work alone. So today, I thank the House for its work on this issue and encourage the Senate to pass the Paycheck Fairness Act, a common-sense bill that will help ensure that men and women who do equal work receive the equal pay that they and their families deserve Passing this bill is one of the Task Force’s key recommendations, and I hope Congress will act swiftly so that I can sign it into law. If you would like to read more about President Obama’s comments, you can click on the link below to visit the White House blog on this issue.

However, to all disputes, many feel much different about the Paycheck Fairness Act. Some of the greatest concerns that were mentioned in a Forbes blog written by Daniel Fisher are that the Paycheck Fairness Act will eliminate flexibility in addressing different salary histories for new hires, different salary demands from existing employees, the size of pay raises for people promoted into new roles, etc. The article mentioned a quote from Allan Dinkoff, who is with the employment law practice at Weil, Gotshal Manges. When addressing President Obama’s comment “a common-sense bill”, Dinkoff said, “But the core of the bill is anything but common sense”. You can read the full article below titled “Paycheck Fairness Act Will Be Anything But”.

The White House Blog
Paycheck Fairness Act Will Be Anything But
DBSquared in the News:

Delivering automated solutions as a Software-as-a-Service (SaaS) model is a direction that many organizations are moving towards. By offering an online application in the SaaS environment, there are many benefits provided to the client organization. Faster speed when working with an application and updates made quickly and easily are a couple of primary benefits. Another great benefit would be freeing a clients IT department from day-to-day oversight as the service provider can host the solution and manage the client’s database. DBSquared recently launched a compensation management system in the SaaS environment to meet their client’s needs. The details are listed in the press release below. Please click on the link to learn more.

Press Release
August 2010 Edition
Newsletter Spotlight
The Paycheck
Fairness Act:
“A common sense bill”

DBCompensation & DBDescriptions

Free Demonstration! Would you like to like to see how you can create job descriptions in minutes? Would you like to see an all automated compensation management system, which handles job evaluation and salary administration? Please join DBSquared for one of our complimentary webinars. We would love to show you how automation can save your organzation time, energy and money. There are two upcoming online meetings. Please click on the link below to register.

 

Re Novartis Wage and Hour Litigation

On July 6, 2010, the Second Circuit Court ruled that Novartis Pharmaceuticals Corporation’s pharmaceutical sales representatives did not meet the requirements of the administrative or outside sales exemptions under the Fair Labor Standards Act. Therefore, they were incorrectly classified as exempt employees. The Second Circuit also reversed a decision by the district court for the Southern district of New York and reached a conclusion contrary to that reached by the Third Circuit in the recent Smith v. Johnson &Johnson case.

This story was posted by the Wage and Hour Practice Group on July 12, 2010. Some of the Supporting Facts that led the Second Circuit to this decision for outside sales employees are below:

  • The Second Circuit concluded that the Novartis Reps do not meet the requirements of the outside sales exemption because they do not “make sales.” The court relied heavily on the Secretary of Labor’s amicus curiae position that a “sale” requires an exchange of consideration between buyer and seller and that, at best, Reps simply seek a positive affirmation from physicians that they will prescribe Novartis’s products in the future.
  • Although Novartis argued that the preamble to the regulations accompanying the FLSA provides that “commitments to buy” may constitute “making sales” under the exemption, the court rejected the argument as applied to this case. It held that the type of ’commitment’ the Reps seek and sometimes receive from physicians is not a commitment ’to buy’ and is not even a binding commitment to prescribe.”

This information was taken from the Wage and Hour Counsel website. To read more about this case and learn more about the Outside Sales exemption as well as the Administrative exemption, please click on the link below.
Second Circuit Finds Pharmaceutical Sales Representatives Non-Exempt

Does Structure Really Hamper Effective Pay Decisions?

Does Structure Really Hamper Effective Pay Decisions?

It’s winter and no one will blame you if have thoughts of cruising the Caribbean.  Cruising offers an interesting analogy to pay policy structure.  All passengers will board the same cruise ship and reach the same planned destination, but no two passengers will have the exact same experience during their several days at sea.  Though the framework is the same, a cruise ship offers a flexible experience for its customers.

Flexibility with structure is good!  There is a misconception that an adopted pay policy program will limit pay decision flexibility by executives and managers.  A common refrain we hear is “I need to have the freedom to reward talent”.  But managers must understand that with freedom comes responsibility, to all stakeholders.

Executives need to exercise freedom from within a structure that ensures consistency AND equity.  Combined these characteristics promote:

  • Balance and fairness
  • Clarity and motivation
  • Greater understanding
  • Increased compliance.

Learn how to exercise freedom with responsibility.

Download White Paper: A Common Misconception

Complimentary Webinars –
Critical Concepts – Compliance Primer: Making Sense of the ‘Alphabet” Soup.  Thursday Jan. 20th at 10AM (CST)EEOC, OFCCP, Lily Ledbetter, FLSA, ADA, etc.  Which ones do you need to understand fully to thrive?  There is a continuing emphasis on reducing pay inequity that must be considered strategically as a foundation for any comprehensive compensation policy.Please join us for this complimentary webinar to learn ways to establish a a philosophy that fits with your company’s goals.  Start the New year off right by implementing your own strategic compensation philosophy in 2011.

On-line Demo – DBCompensation. Thursday Jan 27th at 10AM (CST)

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