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Overtime FAQs

Overtime FAQs

By on Aug 27, 2018 in Blog, Compensation Consulting, Compliance, Job Analysis | 0 comments

Last week’s blog asked the question How do you decide if an employee should be paid overtime? As we showed, it depends on what and how an employee is paid, and the kind of work they do.  When we explain this to our clients, they usually have some follow up questions.  Below are some of the most common. Does the amount a person gets paid matter? To be deemed exempt from overtime the salary test must be passed.  This test states that the employee be paid a salary more than $455 per week.  This equates to about $11.40 per hour, or $23,660 per year.  Anyone paid less than this must be classified as non-exempt with the exception of certain sales jobs.  If an employee is paid more than $100,000 per year, which can include commissions, bonuses and other types of nondiscretionary compensation, they may be exempt from overtime but other components of the test must be satisfied to meet the exemption test. If I pay a salary, do I still have to pay overtime? In some cases, yes.  Even if you pay a salary, if the job does not meet the exemption tests, you still need to pay overtime.  The employee will still need to complete a timesheet or use your timekeeping system to record if they work more than 40 hours per week so that any hours over that are paid as overtime. What if the employee wants to be paid a salary and not receive overtime? While some employees perceive being paid a salary and not receiving overtime as higher status, the employee is not allowed to choose or elect to give up their rights to overtime. Even if you have them sign a waiver, the waiver will not be deemed valid. What if I change the job title? The determination whether the job is exempt from overtime is not based on the title, so changing the title to something that appears higher than the role won’t work. The determination of whether a job is exempt is based solely on job content [in addition to how and what it is paid] which means the duties of the job, its qualifications, and the amount of independent decision-making around matters...

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How do you decide if an employee should be paid overtime?

How do you decide if an employee should be paid overtime?

By on Aug 23, 2018 in Blog, Compensation Consulting, Compliance, Job Analysis | 0 comments

The question comes up often when we work with clients…do we pay this job an hourly rate or a salary?  This one is tough to answer…and many times we have to take the client on a journey to understand an important compensation consideration. Often the question isn’t about paying hourly versus a salary per se…it’s more about whether the employee should be paid overtime or not. In reality you can pay employees an hourly rate or annual salary, but even if you pay an annual salary, in some cases you must still pay overtime.  Why is this? It comes down to the fact that in order for an employer to be relieved of paying overtime…in other words, for the role to be EXEMPT from overtime, it must meet the conditions of tests that have been developed by the US Department of Labor.  Failure to meet the conditions of these tests means the job is not exempt from overtime, and the employees in that job must be paid overtime. Basically, there are three tests that must be met completely: Salary Level: The minimum salary level required for exemption is currently $455 paid weekly [$23,660 annually and $11.38 per hour]. Anyone paid below this level must be paid overtime. Salary Basis: To meet the requirements of the salary basis test, the employee must be paid a predetermined amount for each pay period and compensation may not be reduced due to the number of hours worked in a work week or the quality of work completed. It also states that the employee must be paid their full salary if they perform ANY work for that week, but they do not need to be paid if NO work is performed during that work week. Job Duties: The third test is the job duties test. This test focuses on the primary duties performed by certain types of employees including executive, administrative, professional, computer, and outside sales employees. These different types of employees each have specific duties tests that must be met for them to meet the requirement. Note that this means that the CONTENT of the job, and not its TITLE, will determine whether it is exempt or not. What does this mean in...

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Client Success Story – First Federal Lakewood

Client Success Story – First Federal Lakewood

By on Sep 21, 2016 in Blog, Compensation Consulting, Job Analysis, Job Descriptions, Success Stories | 0 comments

First Federal Lakewood is a great example of how Organizational Architecture’s compensation consulting assists its clients by conducting job analysis and compensation studies to ensure they are paying competitively compared to the market. First Federal Lakewood has been committed to helping Ohio residents and businesses achieve their financial goals by actively listening to and understanding their needs. Dedicated to the strength and economic growth of the communities they serve, they’re proud to be the largest independent depositor owned bank headquartered in Ohio. Maureen Swanson, Human Resources Business Consultant at First Federal Lakewood, said, “Our job descriptions had not been updated in years and did not accurately represent the current duties our staff performed in their positions. It wasn’t a matter of IF we [HR] could update the job descriptions ourselves, it was a matter of WHEN and HOW. With a small HR staff and over 200 positions within our organization, we did not have the bandwidth to effectively do this type of overhaul. Organizational Architecture was able to update all of our job descriptions and also provided us with tools and templates to create and update future job descriptions in a consistent format. “Once the job descriptions were updated, the next item on our list to tackle was our salary grade system. We previously used a combination of a point factor style system and market pricing to evaluate our jobs and create our salary grade system, which we had used for years, but just didn’t make sense for how we wanted to align our total rewards and HR strategy with our organizational strategy. Organizational Architecture conducted a compensation study, which not only did they create a new salary grade system that made more sense for our organization, but they also completed an impact analysis by assigning salary grades to each job from our new system and identifying any pay equity issues for positions that fell above or below their newly assigned salary grades.” “Now our HR department feels confident we can attract and retain future and current employees for our organization and our employees are more satisfied seeing job descriptions that reflect their current position accurately.” Compensation is a powerful tool often overlooked in most organizations. Even implementing simple compensation tools, systems, and policies can make a world of...

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Client success story – Job analysis and compensation study

Client success story – Job analysis and compensation study

By on Sep 19, 2016 in Blog, Compensation Consulting, Job Analysis, Job Descriptions, Success Stories | 0 comments

A recent success story shows that conducting a job analysis and compensation study can become a powerful way to ensure that your organization is paying current and future employees correctly for the work performed and relative to the market.  Our client is a community bank headquartered in Cleveland, Ohio and needed to know if they were paying competitively compared to the market from which they draw talent. Our initial assessment of their position descriptions and compensation program uncovered these challenges: Outdated position descriptions that did not reflect the current jobs that employees performed within their role; Use of an outdated point factor system to conduct job evaluations; A salary grade system that had not kept pace with the market. We worked collaboratively with their HR department to perform the job analysis on over 200 jobs to determine essential duties, necessary competencies, necessary education and experience, consistency, compliance and, relevance to the job as it exists. Customized and integrated job content questionnaires and position description templates were developed that allowed for documentation and communication of expectations for the job. Creating these tools also provided a process to analyze new jobs when headcount additions are approved. Once the position descriptions were completed and ensured the jobs performed were accurate, we completed the benchmarking analysis of their base compensation. After careful review of the benchmarking analysis, we developed a salary grade system with variable range spreads and a salary grade range progression that made most sense for their organization, but also aligned with their organization’s total rewards strategy. Overall, updating the position descriptions and salary grade system provided greater clarity and structure around position responsibilities and ensured all employees were compensated fairly relative to the job they performed. Do you need assistance with developing a job analysis process, salary grade system, and have other compensation consulting needs?  Contact us and check out our blog for more helpful...

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