Management Managing Employee Reward Systems Fair Labor Standards Act Minimum Wage Provision –$5.15 / hr. –Advantages - wage floor, min. standard of living –Disadvantages - limits opportunity for unskilled, and the youth; may encourage substitutes for labor. –Tipped employees - $2.13 / hr. Overtime Provision –1.5 X Base Wage Rate for > 40 hours/ week –Only non exempt ees’ (hourly) covered –Employer Required to file non-exempt ees’ records of work hours with Dept. of Labor

Management Managing Employee Reward Systems FLSA (Cont’d) Enforcement of FLSA –Audits –Investigations –Remedies include back wages, attorney fees and court orders to stop violating FLSA –Fines and imprisonment for willful violators Exemptions –Executives/ Managers –Administrative Employees –Professionals –Outside Sales Force Challenge: Correct Classifications of Jobs

Management Managing Employee Reward Systems Problems Managing Under the FLSA Correct Classifications of Exemption Jobs –Exs. Team leader? Telemarketers? Bonus Calculations - Non-discretionary bonus is part of overtime pay calculation. –Ex. Shift premiums, Xmas bonus, special duty pay. Independent Contractor or Employee? –Set own hours, own tools, own office & work site Tracking hours of non-exempts - Time clocks? Inflexible work hours - bias to 40 hr. work week. –50/30 schedule --> 10 hrs. OT Comp Time - time off instead of pay for OT?

Management Managing Employee Reward Systems Managing FLSA in the work place of the 1990s: Critical thinking Questions Overtime Provision: How do you manage the overtime of people who telecommute from a home office? There is a negative incentive to provide variable pay for non-exempt employees because the “bonus” calculation becomes very complicated for overtime. Is there a way to avoid this problem?

Management Managing Employee Reward Systems Equal Pay Act (1963) Definition: Equal Pay for Jobs of Substantially Equal Work Federal law to insure that women are paid equal to men if they are doing similar work. Factors that Define Equal Work Skill Effort Responsibility Working Conditions

Management Managing Employee Reward Systems Equal Pay Act (Continued) There are 4 Legal Exceptions to the EPA: Men and Women’s Pay on a similar job can be Different Due to Differences in Seniority 2. Performance or Merit ( A valid Supervisor- based evaluation of performance) 3. Quantity or Quality of Output (such as a piecework or sales commission plan) 4. Factor other than Gender such as Night shift differential or hazardous duty differential.