1. © Prentice-Hall, Inc., 2001 Chapter Three Contextual Influences on Compensation Practice

2. © Prentice-Hall, Inc., 2001 Figure 3-1 Employers’, Employees’, and Government’s Goals Employers EmployeesGovernment

3. © Prentice-Hall, Inc., 2001 Table 3-1 Differences Between Annual Minimum Wage Earnings and Annual Poverty Thresholds for Selected Years YEAR FED. MINIMUM HOURLY WAGE ANNUAL MINIMUM WAGE EARNINGS (hourly min. wage x 40 hr/week x 52 weeks)A ANNUAL POVERTY THRESHOLD (family of three)B DIFFERENCE A - B 1980 1986 1989 1990 1992 1994 1996 1998 $3.10 $3.35 $3.80 $4.25 $4.75 $5.15 $6,448 $6,968 $7,904 $8,840 $9,880 $10,712 $6,565 $8,737 $9,885 $10,419 $11,186 $11,542 $12,156 $12,750 -$ 117 -$1,769 -$2,917 -$2,515 -$2,346 -$2,702 -$2,276 -$2,038 Source: US Dept. of Commerce, Statistical abstracts of the US, 119th ed. (Washington, DC: US Government Printing Office, 1999).

4. © Prentice-Hall, Inc., 2001 Table 3-2 Six Defining Factors of Trainee for the FLSA l The training, even though it includes actual operation of the employers’ facilities, is similar to that which would be provided in a vocational school. l The training is for the benefit of the trainee. l The trainee does not displace regular employees but works under closer supervision. l The employer providing the training gains no immediate advantage from the trainees’ activities; on occasion, the employer’s operation may in fact be hindered. l The trainee is not guaranteed a job at the completion of the training. l The employer and the trainee understand that the employer is not obligated to pay wages during the training period. Source: J.E. Kalet, Primer on wage and hour laws (Washington, DC: Bureau of National Affairs, 1987).

5. © Prentice-Hall, Inc., 2001 Table 3-3 FLSA Exemption Criteria for Executive, Administrative, and Professional Employees (1 of 3) l Executive Employees »Primary duties include managing the organization »Regularly supervise the work of two or more full- time employees »Authority to hire, promote, and discharge employees »Regularly use discretion as part of typical work duties »Devote at least 80 percent of work time to fulfilling the previous activities

6. © Prentice-Hall, Inc., 2001 Table 3-3 FLSA Exemption Criteria for Executive, Administrative, and Professional Employees (2 of 3) l Administrative Employees »Perform non-manual work directly related to management operations »Regularly use discretion beyond clerical duties »Perform specialized or technical work, or perform special assignments with only general supervision »Devote at least 80 percent of work time to fulfilling the previous activities

7. © Prentice-Hall, Inc., 2001 Table 3-3 FLSA Exemption Criteria for Executive, Administrative, and Professional Employees (3 of 3) l Professional Employees »Primary work requires advanced knowledge in a field of science or learning, including work that requires regular use of discretion and independent judgment, or »Primary work requires inventiveness, imagination, or talent in a recognized field or artistic endeavor Source: 29 Code of Federal Regulations, Sec. 541.3 29; Sec. 541.1.

8. © Prentice-Hall, Inc., 2001 Table 3-4 Compensable Activities That Precede and Follow Primary Work Activities l The time spent on the activity was for the employee’s benefit. l The employer controlled the amount of time spent. l The time involved is categorized as “suffered and permitted,” meaning that the employer knew the employee was working on incidental tasks either before or after the scheduled tour of duty. l The time spent was requested by the employer. l The time spent is an integral part of the employee’s principal duties. l The employer has a union contract with employees providing such compensation, or, as a matter of custom or practice, the employer has compensated the activities in the past.

9. © Prentice-Hall, Inc., 2001 Table 3-5 U.S. Department of Labor Definitions of Compensable Factors Source: U.S. Department of Labor, Equal pay for equal work under the Fair Labor Standards Act (Washington, D.C.: U.S. Government Printing Office, December 31, 1971). Factor Skill Effort Responsibility Working conditionsDefinition Experience, training, education, and ability as measured by the performance requirements of a job The amount of mental or physical effort expended in the performance of a job The degree of accountability required in the performance of a job The physical surroundings and hazards of a job, including dimensions such as inside versus outside work, heat, cold, and poor ventilation

10. © Prentice-Hall, Inc., 2001 Table 3-6 Glass Ceiling Barriers: The Glass Ceiling Commission’s Major Findings (1 of 2) l Societal barriers that may be outside the direct control of business »The supply barrier related to educational opportunity and attainment »The difference barrier as manifested in conscious and unconscious stereotyping, prejudice, and bias related to gender, race, and ethnicity l Internal structural barriers within the direct control of business »Outreach and recruitment practices that do not seek out or reach or recruit minorities and women »Corporate climates that alienate and isolate minorities and women Source: Fed. Glass Ceiling Commission, Good for business: Making full use of the nation’s human capital (Washington, D.C.: U.S. Government Printing Office, March, 1995).

11. © Prentice-Hall, Inc., 2001 Table 3-6 Glass Ceiling Barriers: The Glass Ceiling Commission’s Major Findings (2 of 2) l Internal structural barriers within the direct control of business (cont.) »Pipeline barriers that directly affect opportunity for advancement (initial job placements, lack of mentoring, lack of management training, lack of career development, counter- productive behavior and harassment by colleagues) l Governmental barriers »Lack of vigorous, consistent monitoring and law enforcement »Weaknesses in the formulation and collection of employment- related data that make it difficult to ascertain the status of groups at the managerial level and to disaggregate the data »Inadequate reporting and dissemination of information relevant to glass ceiling issues

12. © Prentice-Hall, Inc., 2001 Table 3-8 Average Weekly Earnings by Industry Group, 1980 to 1998 Mining Construction Manufacturing Transportation, public utilities Wholesale trade Finance, insurance, real estate Services Retail Trade 1980 $397 $368 $289 $351 $267 $210 $191 $147 1985 $520 $464 $386 $450 $351 $289 $257 $175 1990 $603 $526 $442 $496 $411 $357 $319 $194 1995 $684 $587 $515 $557 $476 $442 $369 $221 1998 $744 $643 $563 $606 $538 $512 $420 $255 Source: U.S. Dept. of Commerce, Statistical abstracts of the United States, 119th ed. (Washington, D.C.: U.S. Government Printing Office, 1999). INDUSTRY