This week’s episode of Talent Economy podcast Talent10x features Workforce‘s Rick Bell, Frank Kalman and Lauren Dixon, who discuss Lauren’s most recent story analyzing the state of meritocracy at work, the latest developments in CEO and business political and cultural activism, and news that Equifax fired its CEO.
Late last week, a federal judge in Texas struck down the Department of Labor’s attempt to raise the salary test for the Fair Labor Standards Act’s white-collar exemptions from $455 per week to $913 per week.
The court held that because the statute defines the administrative, executive, and professional exemptions based on their duties, any salary test that renders the duties irrelevant to the analysis is invalid. Thus, because the Obama-era $913 salary test could overshadow the exemption’s duties in the execution of the exemptions, the new salary level is invalid.
I found footnotes 5 and 6 to be very interesting, but I’m not sure the position they advance are intellectually consistent with the bulk of the opinion.
Compare:
This opinion is not making any assessments regarding the general lawfulness of the salary-level test or the Department’s authority to implement such a test. Instead, the Court is evaluating only the salary-level test as amended by the Department’s Final Rule. … During questioning at the preliminary injunction hearing, the Court suggested it would be permissible if the Department adjusted the 2004 salary level for inflation. [fns. 5 and 6]
-vs-
The Final Rule more than doubles the previous minimum salary level. By raising the salary level in this manner, the Department effectively eliminates a consideration of whether an employee performs “bona fide executive, administrative, or professional capacity” duties. … Nothing in Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a “bona fide executive, administrative, or professional capacity” employee should be exempt from overtime pay. [opinion]
The only way to read the opinion is that any salary test exceeds the DOL’s authority to implement the EAP exemptions (footnotes 5 and 6 notwithstanding). Alternatively, if the only salary test that will pass muster is one that is so low that anyone who meets the duties test also must, de facto, meet the minimum salary threshold (the status quo of $455, adjusted for inflation to $592), why have a salary test at all?
Thus, in my opinion, the DOL’s salary test is DOA. Now, let’s wait for the appeal and see what the court of appeals has to say on this issue.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
Clocking in, signing time sheets and clocking out are normal occurrences in most standard jobs. Working a certain amount of hours and getting paid for them is how work is documented, but the luster of hourly wages and two-week pay periods may not be the shiny gem of the workday that it once was.
Being a time watcher at work is taking on a whole new meaning among millennials.
As technology advances and millennials crave quicker monetary value in their careers, billable time — based on the value of an individual’s work rather than the hours put into it — could be the new normal and propel better time management and productivity at work, experts say. The millennial generation is spearheading this movement to change the way they get paid and give more value to their workday, although it has already been successful in the legal profession, consulting and design agencies.
“Is your employer billable?” is the question Brian Saunders asks when he is completing payroll for his employees, which translates to the productivity of an employee. The CEO of BigTime, a Chicago-based billing and time-tracking software company, he looks at employees as “billable” to maximize their productivity and value in their work. Like a flat rate for a design project or a case review, it’s not about watching the clock but logging specific duties, he said.
“If I am charging you $2,500 for corporate identity work, you don’t need to know how long it took, I just need to do the work,” Saunders said. “The idea of what you are doing on a day-to-day basis and connecting it back to the value has utility beyond just generating an invoice.”
BigTime works with over 2,000 organizations in consulting, legal, engineering, architecture and government contracting that track work based on the time spent on projects and duties, which helps them save money and improve workplace productivity.
A 2016 BigTime study looked at 12 million timesheets and their daily record keeping from clients that use the software to show the implication of the potential revenue companies could have saved by using this method. The study found that the more frequently employees tracked their time, the more money was left behind — $35 billion to be exact.
Saunders said logging time twice a week is what the study found to be most conducive to people’s mind recollection. From a company’s standpoint, looking at what was accomplished on a specific project is more productive than the number of hours. What is equally important is knowing what productivity means to each employee and each firm; knowing how to manage time needs measurement and actual thought.
“At the end of the day, you need time to sit back and reflect [and say], What did I do today?” he said.
While it may not work for every industry, this kind of productivity measurement is working in specific industries that have seen increased employee independence, company success and more deliberate thinking on time management.
These boosts come not only because of better software and a more innovative mindset around billable hours, but how millennials are accessing their funds to motivate their business and personal growth.
Financial wellness is a growing tool used by employers to pass on financially smart time management choices to workers. At McDonald’s, millennial employees are experiencing this first-hand.
Avoiding Bill Collectors
Having immediate access to 50 percent of their daily wages makes them more productive, manage their time more efficiently and not be late for a bill payment, according to Steve Barha, CEO and co-founder of Instant Financial, a tech company that works with McDonald’s to change traditional paydays and help companies give their employees access to money, technically called a pay disbursement program. Instant Financial also works with other restaurants, including Outback Steakhouse and Earl’s Kitchen and Bar.
According to an Instant Financial customer satisfaction survey, 90 percent of surveyed millennials say they would like to work for a company that offers daily pay compared to getting paid every two weeks. Additionally, 32 percent of employees with access to Instant Financial pay have used it to avoid high interest single credit options such as payday loans to balance income and expenses, something Barha said is needed by employees.
“In a world where everything is real time, the only thing that hasn’t changed is how we pay people,” Barha said, calling this the “millennial-style” of instant gratification and information that aligns with other aspects of life today.
But with the technology Instant Financial has created, disrupting the traditional flow of income can be unsettling and controversial because it assumes millennials are smart about their finances, Barha said. He was quick to add that anybody who thinks employees, specifically millennials, are not smart or responsible enough to have daily wage access is incorrect — people are smart and need financial control, he said.
“Employees’ finances are in duress while they sit and wait for their pay to come every two weeks,” he said.
Barha noted that as billing cycles evolve to make for more independence and loan cycles are more frequent, access to money creates more engaged employees, a stronger work culture and less absenteeism among millennial workers.
Keeping Track of Time
A more traditional program that has also improved productivity and engagement among employees was implemented by HR software company Kronos Inc. The employees at Goodwill of Central and Coastal Virginia are two years into the new Kronos initiative headed by John Leopold, director of IT and project manager at Goodwill.
He has seen his store’s new time-management program give employees more mobility to track their hours, clock in, schedule shifts and keep track of their finances. The program has helped eliminate money spent tracking employee time from the HR department, saved money and given the employees more independence, Leopold said. Having all of the services on the Kronos Workforce Ready platform for HCM has provided increased transparency within the organization and empowered the employee, he added.
“That transparency increases the trust factor and they are paid more accurately than they ever were before,” Leopold said.
Leopold said the idea of value and billable time is not currently present at Goodwill, but with many different tasks and better communication among the team, he could see that system being implemented in the future to help employees pick specific tasks and skills with varying pay rates and get paid for their specific work. Through the program, managers can have insight on who is best for the job because everything is logged in the system, which opens that channel for responsibility and goal-setting for the employee.
Whether billable time is the future of payroll, getting value out of your work is important to employees as well as employers. BigTime’s Saunders said working on a project is more fulfilling when you are steeped into its value in the moment, rather than just clocking in and clocking out in terms of physicality.
However, it is too soon to fit it for all companies. He added that what it comes down to is knowing what productivity means and feeling that improvement in your organization based on individual and company measures taken.
Ariel Parrella-Aureli is a Workforce intern. Comment below or email editors@workforce.com.
Defending claims for off-the-clock work is one of the most difficult tasks employers face under the Fair Labor Standards Act.
An employee (or worse, group of employees) says, “I (we) worked, without compensation, before our shift, after our shift, or during our lunch; pay me (us).” Often, these employees have their own personal, detailed logs supporting their claims. And the employer has bupkis. It then must prove a negative (“You weren’t really working when you say you were”), which places the employer in a difficult and often unwinnable position. It’s a wage-and-hour game of rock-paper-scissors, where paper always beats air.
When we last examinedAllen v. City of Chicago — a case in which a class of Chicago police officers claimed their employer owed them unpaid overtime for their time spent reading emails off-duty on their smartphones — an Illinois federal court had dismissed the claims, holding that most of the emails were incidental and non-essential to the officers’ work, and, regardless, the employer lacked specific knowledge of non-compensated off-duty work.
Last week — in what is believed to be the first and only federal appellate court decision on whether an employer owes non-exempt employees overtime for time spent off-duty reading emails on a smartphone — the 7th Circuit affirmed [pdf].
The court started its analysis with the basic principle that “Employers must … pay for all work they know about, even if they did not ask for the work, even if they did not want the work done, and even if they had a rule against doing the work.” From there, however, the court applied the rule first announced by the 6th Circuit in White v. Baptist Memorial Health Care, that an employer is not liable for unpaid, off-the-clock overtime if:
the employer has a policy and process requiring that employees report off-the-clock work;
employee(s) ignore the policy and do not report the off-the-clock work for which they are claiming unpaid overtime; and
the employer does not prevent or discourage its employees from accurately reporting off-the-clock work and unpaid overtime.
Based on this rule, the 7th Circuit concluded that that the district court correctly held that the plaintiff-officers were not entitled to overtime compensation for their off-the-clock emailing.
Plaintiffs … worked time they were not scheduled to work, sometimes with their supervisors’ knowledge. They had a way to report that time, but they did not use it, through no fault of the employer …. Reasonable diligence did not … require the employer to investigate further.
In response, the officers argued constructive knowledge—e.g., the employer could have discovered the uncompensated work by comparing the time slips to email records—notwithstanding the employer’s policy. That argument failed, as the 7th Circuit correctly pointed out that the proper legal standard is should have known, not could have known, and that in the face of policy requiring the reporting of uncompensated off-the-clock overtime, an employer’s access to records does not constitute constructive knowledge.
What is the lesson for employers to take away from Allen, and White before it? Employers must have a reasonable process for employees to report uncompensated work-time, and must not prevent or otherwise discourage employees from using that process. Under the FLSA, it is the employee’s burden to show work during non-working time. A policy that underscores that onus by requiring employees to report times during which they were working “off-the-clock” will place employers in the best position to defend against claims for compensation for unreported, off-the-clock time, and should nullify any personal time logs or other records the employees have to the contrary.
In other words, now is as good a time as any to dust off your employee handbook, open to your “overtime” policy, and, as soon as possible, make sure it contains this language to best insulate your pay practices from dangerous and expensive off-the-claim claims.
When you settle a lawsuit with an employee, you are bargaining for finality. You are paying that employee to resolve all disputes between you, whether asserted or unasserted. You want to be done with that individual forever.
Except that is not always the case.
An employer cannot release or otherwise waive one’s FLSA rights by contract without a court-approved stipulation or settlement, or a DOL-supervised settlement. Which is why, in Nasrallah v. Lakefront Lines, an Ohio federal court recently permitted a plaintiff to continue with her FLSA lawsuit for unpaid overtime despite her signing a general release and waiver in a prior discrimination case.
When Tamara Nasrallah settled her discrimination claim, she and Lakefront Lines signed a settlement agreement, under which Lakefront paid her $40,000, and for which she agreed to a general release “of and from any claims … and expenses (including attorneys’ fees and costs) of any nature whatsoever, whether known or unknown, against [Lakefront] which Nasrallah ever had, now has or asserts or which she … shall or may have or may assert, for any reason whatsoever from the beginning of the world to the date hereof.” The release is “unrestricted in any way by the nature of the claim including, … all matters which were asserted or could have been asserted in the Charge, including, but not limited to, matters arising out of Nasrallah’s employment with the company, and any other state or federal statutory … claims, including, … all statutory claims under federal [and] state laws regulating employment, including …the Fair Labor Standards Act [and] any and all Ohio Wage and Hour Laws.”
Separately in the agreement, Nasrallah waived “any claims for additional compensation and acknowledges that she has been appropriately compensated for all hours worked,” that Lakefront has “paid all sums owed to [her] as a result of her employment with the Company (including all wages),” and that “she is not entitled to anything separate from this Agreement.”
Her justification for her after-the-settlement FLSA lawsuit?
I signed the Settlement Agreement based on my understanding it was unlawful to compromise my overtime claims without Department of Labor or court approval in any manner and that any attempt to do so—including by any “representations” made therein—was legally null and void. Thus, when I entered the Settlement Agreement and made the “representations” therein, I believed my representations about being paid in full and being owed no wages were ONLY representation for purposes of my non-overtime claims (e.g., contract claims for claims for discriminatory pay).
The court agreed:
According to Lakefront, a private settlement agreement can preclude a future FLSA claim as long as the underlying dispute did not involve a FLSA dispute. In other words, the only time an employee can waive a FLSA claim is when there is no bona fide dispute over hours worked, and therefore, likely no discussion or negotiation over compensation due. This is precisely the opposite of what the case law holds. … [S]uch a situation clearly implicates Congress’s concerns about unequal bargaining power between an employer and employee and undermines FLSA’s goals. Rather, … even the most liberal interpretation of the ability to privately compromise FLSA claims only allows such compromises when they are reached due to a bona fide FLSA dispute over hours worked or compensation owed. … [T]he prior dispute between the parties did not involve the FLSA and there is no evidence that the parties ever discussed overtime compensation or the FLSA in their settlement negotiations. Thus, while the Settlement Agreement contains a general statement that Nasrallah was paid for all hours worked, there was no factual development of the number of unpaid overtime hours nor of compensation due for unpaid overtime.
So what is an employer to do?
If you are engaged in litigation, the answer is simple. Ask the court to approve the FLSA portion of the settlement agreement.
If, however, there is not active litigation (e.g., severance or pre-lawsuit negotiations), the issue is much thornier.
I do not recommend that you contact the DOL for its supervision of the settlement. That is a radar that you do not want to be on. The supervised settlement may (will?) beget a full-blown wage and hour audit, which leads to an OSHA on-site, which leads to an ERISA audit…. You get the picture. There is no need to throw yourself in front of this regulatory steamroller.
You could file a lawsuit that simply asks the court to approve the settlement, but that seems likes overkill in almost all situations (even though it is the safest court of action under the strictest interpretation of the FLSA’s requirements for waivers).
A reasonable middle ground? Develop a bargaining history with the employee’s attorney that the employee may have an FLSA claim for unpaid wages, and that you are specifically bargaining for the release and waiver of that claim.
If you can develop a record that overtime pay was specifically negotiated, you will be in a much better position to assure a court in later FLSA litigation that the plaintiff has been compensated for the overtime wages later claimed to be owed. In other words, you almost need to create a claim that does not exist to then bargain that claim away. While this route seems highly inefficient, it may be the only way to protect yourself from a later FLSA claim.
Otherwise, you have zero certainty that the certainty for which you think you have bargained and paid actually exists.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
The Equal Pay Act requires that an employer pay its male and female employees equal pay for equal work.
The jobs need not be identical, but they must be substantially equal, and substantial equality is measured by job content, not job titles. This act is a strict liability law, which means that intent does not matter. If a women is paid less than male for substantially similar work, then the law has been violated, regardless of the employer’s intent.
This strict liability, however, does not mean that pay disparities always equal liability. The EPA has several built-in defenses, including when the pay differential was “based on any other factor other than sex.” So, what happens if two comparable employees, one male and one female, come to you with different salary histories. Does the Equal Pay Act require that you gross up a lower earning female to match the salary of a higher paid male, or do the mere disparate prior salaries justify the pay disparity under the Equal Pay Act?
According to Rizo v. Yovino (9th Cir. 4/27/17), “prior salary history” alone can constitute a “factor other than sex” to justify a pay disparity under the Equal Pay Act.
Fresno County uses a salary schedule to determine the starting salaries of management-level employees. It classifies math consultants as a management-level position. It starts all math consultants at Level 1 of the salary schedule. Level 1, in turn, is broken down into 10 steps. To determine at which step within Level 1 to start a newly hired math consultant, it takes the employee’s most recent prior salary plus 5 percent.
Rizo, a newly hired math consultant, earned less than the Level 1, Step 1, salary at her prior job, even when adding in the 5 percent kicker. Accordingly, the county started her at its lowest starting salary for that position (Level 1, Step 1). Rizo sued under the Equal Pay Act when she learned that a recently hired male math consultant was hired with a starting salary of Level 1, Step 9.
The 9th Circuit concluded that these facts did not support Rizo’s Equal Pay Act claim.
The plaintiff and the EEOC … argue that prior salary alone cannot be a factor other than sex because when an employer sets pay by considering only its employees’ prior salaries, it perpetuates existing pay disparities and thus undermines the purpose of the Equal Pay Act. …
[W]e do not see how the employer’s consideration of other factors would prevent the perpetuation of existing pay disparities if … prior salary is the only factor that causes the current disparity. For example, assume that a male and a female employee have the same education and number of years’ experience as each other, but the male employee was paid a higher prior salary than the female employee. The current employer sets salary by considering the employee’s education, years of experience, and prior salary. Using these factors, the employer gives both employees the same salary credit for their identical education and experience, but the employer pays the male employee a higher salary than the female employee because of his higher prior salary. In this example, it is prior salary alone that accounts for the pay differential, even though the employer also considered other factors when setting pay. If prior salary alone is responsible for the disparity, requiring an employer to consider factors in addition to prior salary cannot resolve the problem that the EEOC and the plaintiff have identified.
Before everyone rejoices, note that Rizo is contradictory to the law of the 6th Circuit (which covers Ohio employers)—Balmer v. HCA, Inc.(“Consideration of a new employee’s prior salary is allowed as long as the employer does not rely solely on prior salary to justify a pay disparity. If prior salary alone were a justification, the exception would swallow up the rule and inequality in pay among genders would be perpetuated”). Rizo is also contradictory to other circuits, such as the 10th and 11th. In fact, Rizo very much appears to be the minority view on this issue.
So what is an employer to do? Follow the law of your jurisdiction. In Ohio, that means that you cannot rely solely on an employee’s prior salary history to justify a pay disparity between similar male and female employees (although you can rely on prior salary plus other factors such as experience, skill, or training). It also means that we wait for the appeal of Rizo to the Supreme Court, and see if SCOTUS decides to take this case and provide some national clarity on this issue.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
According to Suzanne, “Wage theft isn’t always the case of a corrupt boss attempting to take advantage of employees.” She is 100 percent correct. In fact, most instances of an employer not paying an employee all he or she is owed under the law results from our overly complex and anachronistic wage and hour laws, not a malicious skinflint of a boss intentionally stealing from workers.
This is as good a time as any to revisit a topic I haven’t addressed in a few years — ”wage theft” (or, as I call it, a term coined by the plaintiffs’ bar and the media recast employers as the arch nemesis of the American wage earner).
Here is what I wrote on this issue three-plus years ago:
I have a huge problem with the term “wage theft.” It suggests an intentional taking of wages by an employer. Are there employees are who paid less than the wage to which the law entitles them? Absolutely. Is this underpayment the result of some greedy robber baron twirling his handlebar mustache with one hand while lining his pockets with the sweat, tears, and dollars of his worker with the other? Absolutely not.
Yes, we have a wage-and-hour problem in this country. Wage-and-hour non-compliance, however, is a sin of omission, not a sin of commission. Employer aren’t intentionally stealing; they just don’t know any better.
And who can blame them? The law that governs the payment of minimum wage and overtime in the country, the Fair Labor Standards Act, is 70 years old. It shows every bit of its age. Over time it’s been amended again and again, with regulation upon regulation piled on. What we are left with is an anachronistic maze of rules and regulations in which one would need a Ph.D. in FLSA (if such a thing existed) just to make sense of it all. Since most employers are experts in running their businesses, but not necessarily experts in the ins and outs of the intricacies of the Fair Labor Standards Act, they are fighting a compliance battle they cannot hope to win.
As a result, sometimes employees are underpaid. The solution, however, is not creating wage theft statutes that punish employers for unintentional wrongs they cannot hope to correct. Instead, legislators should focus their time and resources to finding a modern solution to a twisted, illogical, and outdated piece of legislation.
“Congress enacted the FLSA during the great depression to combat the sweatshops that had taken over our manufacturing sector. In the 70 plus years that have passed, it has evolved via a complex web of regulations and interpretations into an anachronistic maze of rules with which even the best-intentioned employer cannot hope to comply. I would bet any employer in this country a free wage-and-hour audit that i could find an FLSA violation in its pay practices. A regulatory scheme that is impossible to meet does not make sense to keep alive….
“I am all in favor of employees receiving a full day’s pay for a full day’s work. What employers and employees need, though, is a streamlined and modernized system to ensure that workers are paid a fair wage.”
Do we need to draw attention to the problems posed the FLSA? Absolutely. It misleads, however, to suggest that evil, thieving employers created this mess. Instead, let’s fix the cause of the problem — a baffling maze of regulations called the FLSA.
As for my day? I’m off to draft an answer in an FLSA lawsuit filed against one of my clients.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
If you are a private employer, it is 100 percent illegal for you to provide employees comp time in lieu of overtime for hours worked by non-exempt employees over 40 hours in a work week. If a non-exempt employee works overtime, you must pay them overtime, and you violate the FLSA if you provide comp time in its place.
If enacted, the bill would enable employees to earn compensatory time off at a rate not less than one and one-half hours for each hour of employment for which overtime compensation would otherwise be required. It also:
Caps the amount of comp time an employee may accrue at any given time at 160 hours.
Requires that employers annually pay out any unused comp time.
With 30 days’ notice, permits employers to pay out any unused comp time in excess of 80 hours.
Provided for payment of unused comp time upon termination of employment for any reason.
Prohibits retaliation.
Gives employers the flexibility to schedule requested time off within a reasonable amount of time after it is requests, such that operations are not disrupted.
Critics argue that this bill is a “scam” and “phony”:
Workers may request the time for any purpose they like, including care for a sick child or even baseball opening day. There’s just one hitch: the boss may decide an absence that particular day would “unduly disrupt” business operations and specify an alternative date when the child happens to be well and in school and the World Series has come and gone. Flexibility often is a one-way street. … There are a few other drawbacks. When overtime assignments come around, workers get to choose which option they prefer, pay or comp time. But the boss also gets to make the assignments. Those who need overtime to pay the bills may well be passed over. For them, this bill represents a pay cut.
That argument missed one key piece of the legislation — the decision to choose comp time in lieu of overtime rests solely with an employee.
An employer may provide compensatory time to employees … only if such time is provided in accordance with a [written] agreement arrived at between the employer and employee before the performance of the work … (i) in which the employer has offered and the employee has chosen to receive compensatory time in lieu of monetary overtime compensation; and (ii) entered into knowingly and voluntarily by such employees and not as a condition of employment.
In other words, if an employee values overtime over comp time and would rather have extra money instead of extra time off, then the employee chooses overtime. If an employee, like many these days, prefers flexibility and work/life balance, then the employee chooses comp time. What is the harm? Where is the lack of flexibility? Where is the pay cut?
This bill (which expired five years after it is passed, and will be a test balloon on this issue) strikes an important balance for employees and employers on an issue that has become more and more important to the American worker — flexibility and time. No, it does not solve every problem with a lack of work/life balance (see, paid medical leave), but it is a quality step in the right direction that we should all embrace.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. To comment, email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
April 4 was Equal Pay Day. It’s not a bank holiday, so no one got to stay home from work, but it is an important date for women.
LeanIn.org, the nonprofit Facebook COO Sheryl Sandberg created to make the workplace better for women, launched its latest campaign/hashtag on the 4th. Joining #BanBossy and #LeanInTogether, #20PercentCounts shines a bright light on the fact that, on average, women make 20 percent less than men in the U.S.
According to the Forbes piece where I learned about the campaign, that stat is quite a bit worse if you’re a woman of color. Black women make 37 percent less, and Hispanic women make 46 percent less. Over the lifetime of a woman’s career that disparity could cost her a good half million dollars.
Ouch. I’m bleeding over here, metaphorically speaking. But, in an effort to stem some of the pain, starting on the 4th hundreds of companiesaround the country are offering a 20 percent discount to draw attention to wage disparities.
That’s great. But you know me. I want to know why. Why does this pay gap still exist? Why are so few organizations correcting these obvious inequities? They know about the problem; the data certainly isn’t a secret. The scope of the issue is not small; it touches every industry with the possible exception of the fashion industry; female models traditionally make more than their male counterparts.
Even if companies could reasonably pretend ignorance President Obama publicly tried to put us on the path to financial parity. Though his efforts have been neatly undercut, or should I say revoked, by the current administration.
So why the whole ostrich act? It’s a complex answer related to widespread workplace culture change, budgets, leadership accountability, commitment to diversity and inclusion and a host of other strategic concerns that impact most dimensions of diversity in some shape or another. But the short answer is, companies don’t want to fix this problem.
But here’s the thing. Women are fed up, and we’re speaking out. Executives like Sheryl Sandberg, actresses like Jennifer Lawrence, Emma Watson and a host of others — including some big name men — are creating a stink that could have direct implications for the talent marketplace.
So, diversity and talent leaders, if your company isn’t making an effort to make its pay practices fair, you’ve been officially put on notice. Do it, or you will lose talent, you will lose discretionary effort, you will lose engagement, productivity and more. You will incur negative costs related to turnover, retention, recruiting, litigation and brand reputation. All it takes is one tweet or video to go viral, and your standing in the global marketplace will take a hit so big it’ll make a gunshot look like a scratch.
Ask Lyft. It has been thoroughly enjoying the customer-related fruits of Uber’s female-centric missteps. Ask Pepsi. That team can tell you what happens when you make light of the issues that minorities care about. And women — all numbers aside — are very much considered minorities.
We’re also not stupid. We know the only thing standing between us and a fair wage is desire. If I’m not being clear, I’m saying: Women aren’t being paid the same salaries as their male peers for the same work because companies don’t want to pay them the same salaries as their male peers for the same work.
Companies don’t want to invest the time or the resources to investigate and identify pay inequities and root out the issues that perpetuate this cycle of discrimination. That would take time, effort and require a ton of change, and we all know change is rarely easy for any person, let alone an entire organization.
Companies don’t want to acknowledge that they may be — are — systemically cheating a sizeable chunk of their workforce out of their hard-earned pay. It could throw the door to legal sanctions wide open, bring the wrath of a thousand lawsuits down on their heads, not to mention giving women ideas about what else they deserve in the workplace.
But companies are going to pay one way or the other, whether in cash or in kind. Think about this scenario.
A hard-working woman with great ideas and a knack for business development requests a raise after learning her male peer is making more money than she is. She is denied. She leaves, starts her own company, and many of the clients she brought to her former employer choose to leave with her. See, they know where the talent and creative juice comes from.
She pulls so much business away from her old employer they have to hire her as an external consultant to get back some of that innovative, market savvy they shortsightedly let go. Her rate as an independent operator is triple — or more — what it was when she was an employee.
I didn’t just make that story up. It happens all the time because more women than ever are choosing to leave the workforce and start their own businesses.
Companies have a choice to make. Will they pay on the front end — top talent recruiting, brand reputation, customer loyalty — or will they pay on the back end — legal fees, turnover, retention issues? Will they acknowledge that pay gaps exist and do the work required to close them, or will they turn a blind eye and unwittingly encourage their female talent to vote for a better way of life and career with their feet?
It’s up to talent leaders to decide how and when they’ll take that bitter pill, and whether or not they’ll choke while it’s going down.
Kellye Whitney is associate editorial director for Workforce. Comment below or email editor@workforce.com.
Randstad recently released its annual salary guide.
Staffing Agency Randstad released its 2017 Salary Guides, which cover seven industries including human resources.
With the low unemployment rate and a skilled labor shortage, HR organizations must position themselves to attract and retain top talent, according to the guide released Feb. 21. Across generations, gender and education levels, salary and benefits was cited as the most important factor when choosing an employer.
The guides provide an in-depth look at salaries for many in-demand roles:
Human resources
Information and technology
Engineering
Finance and accounting
Life sciences
Manufacturing and logistics
Office and administration
“As a staffing agency, we feel it is our responsibility to provide our clients and employers with the salary information they need to make employment decisions in their best interests,” said Jim Link, chief human resources officer of Randstad North America. “With the strong economic growth over recent months, workers can anticipate an average pay increase of 3 percent in 2017.”
Compensation information is highlighted for specific positions within these sectors. Over 40 geographic markets are grouped into five pay zones that offer similar pay rates. Salaries in specific regions vary based upon local market conditions and position-specific requirements such as company’s size, experience levels, professional certifications or certain software knowledge. The data reflects base compensation and is derived from a combination of private and public companies through the Economic Research Institute.
According to Randstad, among the highest compensated lower-level HR positions is a benefits and compensation specialist, earning a base salary of $79,644 per year in areas including San Jose, California, and Fairfield County, Connecticut. The average salary for an HR manager in the professional services industry is $78,898 to $100,940 in New York. The lowest compensated lower-level HR position is a human resources coordinator, earning a base pay of $32,187 annually in geographic markets including Jacksonville, Florida; southern Nevada; Columbus, Ohio; and central Pennsylvania.
In Chicago, the lowest salary for a VP of HR is $126,690 in the nonprofit sector, according to the report. Other salaries from the guide: The highest VP of HR position earns $190,550 in the insurance and IT/software industries. A senior HR manager earns $79,644 to $123,600 annually. The average salary for an HR coordinator in the health care industry is $37,131 to $47,792. The average salary for an HR generalist in the financial services industry is $63,705 to $84,924. A learning and development director earns $95,532 to $163,410 annually. The highest salary for head of recruitment is $164,800 in the insurance, IT/software and financial industries.
Today’s talent pool is limited, and it’s difficult for hiring managers to fill open positions. “There are currently 5.5 million job openings and only 1.4 unemployed people per job opening,” said Link. Employers requiring candidates with specialty skills have an even smaller candidate pool from which to hire. The supply and demand of talent can significantly impact how attractive your compensation package must be to draw top candidates.
The guide provides a benchmark for assessing the strength of an organization’s pay rates against those of competitors. It’s become a candidate-driven market where job seekers utilize tools to determine if they are getting paid what they’re worth. Knowing the market average for specific positions and nearby geographies can ensure candidates and employers receive the most competitive offers. “The guides serve as a reality-check for securing the best talent in a competitive, job-heavy, talent-short economy,” said Link.
Mia Mancini is a Workforce intern. Comment below or email editors@workforce.com.
