|
Be Careful How You Pay Exempt Workers This Holiday Season
This year Christmas Day and New Years Day fall on Mondays. And, in some industries, it is a common practice to shut down operations for either one or both of those holiday weeks.
If you are among those employers who will be closing the doors during the holidays, be sure you have communicated your plans and expectations well to all employees, both exempt and non-exempt.
Exempt workers, usually supervisors, managers, and professionals, must be paid in one-week increments, regardless of the amount of time they work during the week. That literally means if an exempt person works for only five or ten
minutes checking voice mail or email they will qualify for the entire week's pay.
So, if you are planning to close your doors for a week or more, and have notified employees that the closure will be logged as unpaid time off, be sure you communicate clearly to your exempt people that they are prohibited from
doing any kind of work during that time. If, on the other hand, you want exempt people to "stay on top of things," log their time as paid on your payroll and cut a check for the entire week's work.
Pay for the holiday is pay for non-worked time. Only work time is considered when determining if an exempt person should be paid for the entire week.
Non-exempt workers are supposed to be paid for the hours they actually work, so it is perfectly acceptable to have them work for short periods during your "closed weeks" as long as you pay them for those hours of work.
Reference For Above: Copyright, 2006 by The Management Advantage, Inc.
Minimum Wage Compliance Tips
NOTE:
The new minimum wage could mean that you need to apply "two" pay rates for exempt employees affected by the new minimum wage!
HERE ARE SOME GUIDELINES:
Post the New Employer Poster
Get a 2007 Poster Set that displays the new rate by January 1, 2007.
Ensure Hourly Wages Meet the New Minimum
Adjust all minimum pay rates to $7.50 per hour; $11.25 per hour for time and a half; and $15.00 per hour for double time.
You may need to adjust salaried, non-exempt employees' salaries to correspond with the new minimum wage.
Review Exempt Employee Salaries
In California, the test for exempt status includes minimum salary levels that are tied to the hourly minimum wage. Most exempt employees must be paid a salary of at least twice the hourly minimum.
To maintain exempt status after January 1, 2007, you must be sure that each exempt executive, administrative and professional employee's salary meets the new minimum salary requirements of $2,600 per month ($31,200 per year).
If you employ exempt commissioned inside salespersons, they must:
-
Earn more than one-half their compensation from commissions.
-
Weekly earnings must be not less than one and one-half times the state minimum wage.
If you increase the salespersons base rate to meet the new minimum, but they experience no increase in commissions, they may fail to meet the first part of the test. If the combination of hourly rate and commissions doesn't equal or
exceed the second test on a weekly basis, the overtime exemption is also lost.
Examine Your Policies
Review your company's various policies to adjust all minimum rates to $7.50 per hour or higher. For example:
-
Travel Time
Your hourly employees make at least $12.00 per hour, but your company pays minimum wage for travel time. Your policies and practices need to reflect the new minimum wage.
-
Piece Rate
You pay employees a piece rate. You know that, even with a piece rate, employees must make at least the minimum hourly wage. Managers or other personnel who review payroll must be told about the new minimum wage amount to ensure accurate
payment and compliance with wage and hour laws.
-
Split Shift
An employee works a split shift so one hour's pay at the minimum wage may be due. The minimum wage must be adjusted for the new rate.
-
Sub-minimum Wage
The hourly rate for employees who may be paid sub-minimum wage must be based on the new minimum wage, resulting in an increase for these workers.
-
Tools, Uniforms and Equipment Costs
Employees whose wages are at least two times the minimum wage may be required to provide and maintain hand tools and equipment customarily required by the trade or craft. The new minimum wage may bring some employees below the minimum
salary for this requirement.
Also remember to assess the secondary effects of the minimum wage change:
-
Cost of Benefits
Review your cost of benefits to determine what impact compensation increases will have on your 2007 expense budget.
Wage Compression
Perhaps the most challenging effect of a minimum wage increase is analyzing and addressing the effect of wage compression. Wage compression occurs when there's upward pressure on entry-level compensation, causing a ripple effect that's
felt throughout the wage and salary structure. It includes both the competitive pressures of a tight labor market as well as mandated minimum wage hikes.
Minimum wage increases immediately impact industries employing low-wage workers who may be at or only slightly above the pre-existing minimum wage. Employee relations problems also arise because exempt supervisors may be making less money
than their non-exempt subordinates, whose pay often includes significant overtime pay.
You should closely examine changes made to non-exempt employee compensation to remedy the "compression" of the differential between their wages and the pay of more senior employees.
MJMS can help you examine wage compression in your organization.
Click here for a free compression worksheet to assist you in this process.
Year-End Review and New Year Preparation
It has been said that, "The best teacher is a teacher called life. And when you reflect on the past you are capturing the valuable lessons that your life has to offer."
This holiday season, take some time ... review 2006 and create 2007. Here are some questions you may want to ask yourself!
While reviewing 2006:
-
What were my successes?
-
What did I accomplish?
-
What did I accomplish that I am most proud of?
-
What experiences touched me the most?
-
When did I have the most fun?
-
What experiences were the most powerful? Most sacred?
-
What were my major breakthroughs of the year?
-
What major obstacles did I overcome?
-
What were my disappointments?
-
What mistakes did I make?
-
What lessons did I learn?
Now create 2007 with these intentions in mind:
-
For my body/soul/spirit?
-
My relationships?
-
My home environment?
-
My work/service?
-
My finances?
-
My growth/development?
-
My fun, adventure, expression?
-
In which areas of my life do I plan to move forward in 2007?
-
What challenges do I intend to overcome?
-
What specific goals do I intend to achieve in 2007?
Happy New Year!
|
|
