Deck 17: Government and Legal Issues in Compensation

Question 1

Your employer is considering whether to pursue business opportunities with the federal government. You have been asked to "... determine what is required to conduct a Voluntary Self-Evaluation of Compensation Practices following the June 2006 OFCCP Guidelines." The company needs to better understand the resources (talent, information, data access, timing, etc.) that it would need to devote to such a self-evaluation. Your boss emphasizes, "Only scope out what it will take-give me your ballpark ideas."
Based on your professional judgment, discuss in the memo the factors your boss needs to consider (expected value gained, risks to manage, outsourcing, etc.) before undertaking a "Self-Evaluation" project.

Answer 1

NO ANSWER

Question 2

Consider contemporary practices such as skill-competency-based plans, broad banding, market pricing, and pay-for-performance plans. Discuss how they may affect the pay discrimination debate.

Answer 2

The Equal Pay Act in Country UU prohibits the pay discrimination based on the gender. The contemporary practices like skill-contemporary based plans, market pricing, broad banding and plans of pay for performance affects pay debate discrimination.
Competency-based plan in which a person is rewarded based on the performance. The pay discrimination can be affected as the performance of men and women may not be considered equal. There is no seniority factors considered; neither there is consideration of prior pay packages of employees which can affect the pay discrimination debate negatively.
Broad banding is same as pay grade system. Broad banding refers to having extremely wide salary bands. This wide range of salary bands can affect the pay discrimination debate. The pay discrimination can become crucial for the wide range of compensation in broad banding.
Market pricing provides competitive compensation data for the positions. The surveying of the market and the prices of incentives and compensation is required before paying employees. The pay discrimination debate is affected as there may be differences in pay scale for different gender.
Pay for performance plans are the signals of movement away from the entitlements. Sometimes there is very slow movement toward the pay which varies with some degree of discrete or structural performance which may affect the pay discrimination debate.

Question 3

What factors help account for the pay gap

Answer 3

The pay gap of gender is the average difference between the payment for men and women working in any organization. Women are normally paid less than men.
The factors which are accountable for the pay gap are as follows:
• Work or occupation differences of responsibilities given, efforts needed, skills required and conditions of working
• Qualification differences in education and experience
• Firms or industry size, technology and pay strategy
• Work related behavior differences like performance, turnover, working hours and career tradeoffs
• Discrimination
• Union differences like interests and power
• Labor market differences like supply or demand for particular skills
Hence, the above factors are responsible for the pay gap.

Question 4

What kinds of proactive activities can an employer undertake to enhance the regulatory environment

Question 5

You work at an upscale coffee shop that is part of a nationwide chain of 200 such stores. You started as a barista, but then you moved up. Your title is now store manager. You are expected to work 55 hours per week. Your boss says you need to be in the store to get to know the customers and because, well, you are the manager. It is up to you to make sure everything runs smoothly and that there is a great customer experience, which translates into growth in store sales volume and store profit. By the way, however many hours you work, you get paid for 40 hours only (and no overtime pay) because... that's right, you are the manager.
However, as you think about how you spend your time at the store, you can't help but feel that a lot of your time seems to be spent on things that don't seem much like "management" to you-making coffee drinks, checking supplies, and sometimes cleaning bathrooms. So, this is the life of a manager. It seems a lot like being a barista, except that you work a lot more hours, have more responsibility, and you don't get paid all that much more. You do spend some time on training other employees and you interview job applicants. But, the district manager is around a lot and she seems to have her own ideas on who to hire most of the time and how to run the store. Plus, there are pretty clear corporate guidelines to be followed on how to run many aspects of the store.
The more you think about it, the more you think that it sure would be nice to get paid for working 55 hours. In fact, you have friends who work in other businesses and when they work over 40 hours in a week, they get time and a half for the hours beyond 40. That sounds awfully good. If you are going to spend all of your time at work, it would be nice to at least get paid what you deserve for it.
Now, "switch hats" and look at it from the company point of view. Is this company running afoul of the Fair Labor Standards Act (FLSA) Refer back to our discussion earlier in this chapter. Would this company be able to document that the store managers are exempt from the FLSA (not to mention similar state laws) Also, what would it cost to re-classify your store managers as non-exempt If managers feel overworked and underpaid, what do you project that they will do when the economy picks back up Is that a concern for the company Is the company in compliance with the FLSA What would it cost to have a lawsuit filed against the company Have other companies in your industry (e.g., Starbucks, Caribou, Peet's, etc.) had any FLSA issues If so, what can you learn from their experiences Would you advise meeting with corporate counsel What facts and observations would you recommend be presented at such a meeting

Question 6

What is the nature of government's role in compensation

Question 7

"I Was Gaga's Slave"
The above headline, "I was Gaga's slave," appeared in the New York Post. Pop superstar Lady Gaga, whose real name is Stefani Germanotta, employed Jennifer O'Neill as a personal assistant for 13 months. Ms. O'Neill is suing Gaga's touring company, Mermaid Touring, in the United States District Court for the Southern District of New York, alleging violations of the FLSA and New York State Labor Law (NYSLL).
Ms. O'Neill, 41, who was paid $75,000 per year, reported that she had to cater to the 25-yearold Gaga's every whim, whether it was related to schedule, finances, or food, at any hour of the day or night. Ms. O'Neill worked for Gaga both in New York City (at her Upper West Side duplex) and also on the Monster Ball world tour, where she assisted Gaga in a variety of settings, including "stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses."
According to Court papers, Ms. O'Neill alleges that there were no breaks for meals "or, at times, even sleep," and that she was required to be on hand for anything the Grammy Awardwinning singer needed, at her "earliest waking hour" or for "spontaneous, random matters in the middle of the night." One of Ms. O'Neill's tasks was "ensuring the availability of chosen outfits," a task of presumably considerable magnitude, given Gaga's unique approach to style (e.g., wearing a meat dress to the MTV Video Music Awards).
Ms. O'Neill alleges that she worked 6,656 hours of unpaid overtime over a period of 56 weeks. She is asking to be paid $359,956.48 for unpaid overtime. Along with this request for back pay, Ms. O'Neill, a graduate of American University, is also seeking unspecified damages.
A spokeswoman for Gaga branded the lawsuit "completely without merit."
Is Ms. O'Neill exempt or nonexempt under the Fair Labor Standards Act Which exemption would be most relevant in this case Conduct a search and describe how the lawsuit turned out.

Question 8

Your employer is considering whether to pursue business opportunities with the federal government. You have been asked to "... determine what is required to conduct a Voluntary Self-Evaluation of Compensation Practices following the June 2006 OFCCP Guidelines." The company needs to better understand the resources (talent, information, data access, timing, etc.) that it would need to devote to such a self-evaluation. Your boss emphasizes, "Only scope out what it will take-give me your ballpark ideas."
Go to www.dol.gov/regs/fedreg/notices/2006005457.pdf. Go to page 35120 and find the section with the title Final Voluntary Guidelines-Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance With Executive Order 11246 With Respect to Systemic Compensation Discrimination ("Voluntary Guidelines"). There are several steps (procedures) listed. The first step, described in Section I.A, deals with sorting employees into "similarly situated employee groupings." Prepare a memo that highlights the steps or procedures required in the OFCCP Self-Evaluation Guidelines.

Question 9

Explain why changes in minimum wage can affect higher-paid employees as well.

Question 10

"I Was Gaga's Slave"
The above headline, "I was Gaga's slave," appeared in the New York Post. Pop superstar Lady Gaga, whose real name is Stefani Germanotta, employed Jennifer O'Neill as a personal assistant for 13 months. Ms. O'Neill is suing Gaga's touring company, Mermaid Touring, in the United States District Court for the Southern District of New York, alleging violations of the FLSA and New York State Labor Law (NYSLL).
Ms. O'Neill, 41, who was paid $75,000 per year, reported that she had to cater to the 25-yearold Gaga's every whim, whether it was related to schedule, finances, or food, at any hour of the day or night. Ms. O'Neill worked for Gaga both in New York City (at her Upper West Side duplex) and also on the Monster Ball world tour, where she assisted Gaga in a variety of settings, including "stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses."
According to Court papers, Ms. O'Neill alleges that there were no breaks for meals "or, at times, even sleep," and that she was required to be on hand for anything the Grammy Awardwinning singer needed, at her "earliest waking hour" or for "spontaneous, random matters in the middle of the night." One of Ms. O'Neill's tasks was "ensuring the availability of chosen outfits," a task of presumably considerable magnitude, given Gaga's unique approach to style (e.g., wearing a meat dress to the MTV Video Music Awards).
Ms. O'Neill alleges that she worked 6,656 hours of unpaid overtime over a period of 56 weeks. She is asking to be paid $359,956.48 for unpaid overtime. Along with this request for back pay, Ms. O'Neill, a graduate of American University, is also seeking unspecified damages.
A spokeswoman for Gaga branded the lawsuit "completely without merit."
Can you find any other examples in the news of similar lawsuits If so, please again form an opinion on whether the plaintiff is exempt or not and which exemption is most relevant.

Question 11

Your employer is considering whether to pursue business opportunities with the federal government. You have been asked to "... determine what is required to conduct a Voluntary Self-Evaluation of Compensation Practices following the June 2006 OFCCP Guidelines." The company needs to better understand the resources (talent, information, data access, timing, etc.) that it would need to devote to such a self-evaluation. Your boss emphasizes, "Only scope out what it will take-give me your ballpark ideas."
Include in your memo your ideas on the resources required for your company to conduct such an evaluation: talent requirements (your estimate of number of people and skills/knowledge required), data access (type of data required for the self-evaluation), timing (your best estimate), and other resources.

Question 12

What is the difference between access discrimination and valuation discrimination