Employee Pay Should Be Equitable and In Compliance With the Law
Estimated reading time: 5 minutes
The title of today’s article might seem a bit obvious. But it’s not intended to say that organizations are intentionally trying to get away with something when it comes to employee compensation and benefits. The title of today’s article is a reminder that when it comes to employee pay, there’s a lot of information to keep track of. And it’s changing all the time.
I wanted to do a roundup of the articles we’ve published this year that reference employee pay, specifically focused on making sure that employees are paid equitably and in compliance with federal, state, and local laws.
Just a reminder, in Season 2 of the HR Bartender Podcast, I chatted with Brian Reaves, UKG’s executive vice president and chief belonging, diversity, and equity officer about a research report from UKG and Harvard Business Review on pay equity. I hope you’ll check it out when you have a moment.
There Is More to Equity Than Just Pay Equity
It’s time for organizations to realize that pay equity isn’t the only equity we need to be addressing. The Centers for Disease Control (CDC) define health equity as the state in which “every person has a fair and just opportunity to attain their highest level of health”. Some of the reasons that we’re not seeing progress with health equity involve other inequities like to education, employment, food, social relationships, etc. It’s a complex topic that involves many other factors and deserves our attention.
Employers: Pay Transparency Might Apply to Your Current Employees
I’d like to think that most organizations know about the wave of pay transparency laws that are being enacted around the United States. But I read an article in the Foley & Lardner LLP newsletter that caught my attention. It was about pay transparency laws applying to current employees. It’s important for employees – at every level – to understand how pay works. And a big part of that is knowing what the pay range is for the job. And frankly, employers should want employees to understand their compensation as part of financial wellbeing.
Everything Organizations Should Know About the Work Opportunity Tax Credit (WOTC)
First created by Congress in 1996, the WOTC is a federal tax credit available to employers who invest in American job seekers who have consistently faced barriers to employment. The targeted groups include qualified veterans, ex-felons, qualified Supplemental Nutrition Assistance Program (SNAP) benefit recipients, qualified Supplemental Security Income (SSI) recipients, and qualified long-term unemployed just to name a few.
I wanted to mention this article about the WOTC today because employers can receive a tax credit of up to $9,600 per qualified new hire, which is equal to 40% of the new hire’s qualified wages, provided the new hire works at least 400 hours during their first year of employment. The Work Opportunity Tax Credit can help talented people get jobs and provide organizations a tax credit for doing it.
Wage Garnishments: Manage Them Effectively, Efficiently and With Empathy
Organizations are very focused on being effective and efficient. This is a common conversation when it comes to technology and compliance. Let the technology do what it does best, and HR will focus on what it does best. This same philosophy applies to wage garnishments. Find a solution that does garnishments well so HR can spend their time focused on the employee experience.
Wage garnishments happen more than we might think. In the white paper “The U.S. Wage Garnishment Landscape: Through the Lens of the Employer”, they report that 1 in 14 employees is subject to some form of wage garnishment. The most common type of garnishment is related to child support (50% +) with tax levies being second (19%). The report indicates that the highest number of garnishments are employees between the ages of 35 and 54. This group also has the highest wage garnishment rate. And approximately one in one hundred people have more than one garnishment.
Fiduciary Responsibilities Under Employee Retirement Plans
Employee benefits, including retirement benefits, are both important and complex. If you’re not aware, organizations and HR departments have what’s called a “fiduciary responsibility” when it comes to employee retirement plans. We often tell employees that their benefits package is a part of total compensation, which is true. But that also means we need to get it right. No one likes having their pay messed with.
If you’re saying to yourself, “This is great information. We definitely need to stay on top of our obligations and do the right thing for our employees. But where should we start?!” It’s a great question. The answer might be to conduct an internal audit.
It Is Time to Schedule a Minimum Wage Audit – 3 Important Steps
In the United States, the federal minimum wage is $7.25/hour. It’s been that since July 2009. However, there have recently been a TON of changes to the minimum wage on a state and local level. Minimum wage laws are changing regularly. Dare I say frequently.
The last thing any company wants is to be considered “out of touch” because they don’t know what the current minimum wage is for employees. Beyond appearing to be clueless, companies can’t afford to risk the potential wage and hour or Fair Labor Standards Act (FLSA) lawsuits from their employees.
As we’re getting ready for the new year, this is a perfect time to do an audit, get reliable information about compensation compliance, and put a plan in place. Organizations do not want to make mistakes when it comes to employee pay and benefits.
Image captured by Sharlyn Lauby while exploring the streets of Fort Lauderdale, FL
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