The “bad girls” of Hollywood still, unfortunately, consume too much media attention and will undoubtedly continue to take top billing. But a couple of compensation related developments, that could affect millions of people, actually made it into the national news.
Minimum Wage. After much wrangling, the first minimum wage increase in 10 years was signed into law on May 25. The federal minimum wage, currently at $5.15/hour, will rise in 3 phases to $5.85 on July 24, 2007, to $6.55 on July 24, 2008, and to $7.25 on July 24, 2009. Obviously these increases impact employers with minimum wage employees who will have to raise pay levels. The raises may also have a ripple effect because as companies adjust salary ranges, there could be wage compression problems which will put pressure on the entire salary structure. There could be other ramifications as well. Wage and hour lawsuits have exploded over the last few years. Employees have become increasingly sensitized to wage issues and regulations. Minimum wage raises will only heighten those discussions. Now is a good time to review your pay practices, including your overtime policies, to ensure that you are in compliance.
Pay Discrimination Claims. The U.S. Supreme Court’s May 29th decision in Ledbetter v. Goodyear also made the news. The decision provides protection for employers against pay discrimination actions that took place outside Title VII’s 180 day deadline for filing such claims. Ledbetter had argued that she was paid $6000 less than the lowest paid male employee because of discriminatory evaluations made years earlier. She contended that each paycheck was a new discriminatory act and so the 180 day clock began again in terms of the 180 day filing deadline. The Court disagreed, finding that forcing companies to defend decisions made years ago would put an unfair burden on business. The decision will certainly limit the number of pay discrimination cases, as in many instances an employee may not even be aware of a problem until years have passed. Employers typically don’t disclose salary information so an employee may not realize what a coworker makes. Additionally, a disparity in salary may be fairly small initially, but can greatly increase over time. While this case involved sex discrimination it will apply as well to other Title VII cases (e.g., those based on race, national origin, etc.) and since the ADA and ADEA are similarly structured will likely apply to age and disability as well.
Pay discrimination claims are prevented by implementing strong HR practices, including implementing a solid base pay structure, an objective performance appraisal system, and training your managers well. Automated systems, such as HRN’s Performance Pro and Compease, make salary administration and merit increases manageable, fair, and equitable. Such systems are the building blocks of a compliant and effective HR department.
Note: Contact HRN Management Group for a demonstration of Compease compensation administration software. For more information go to: http://www.hrnonline.com.