Introduction to
Compensation
Agenda
•
•
•
•
•
•
Marquette University’s compensation philosophy
What is the Fair Labor Standards Act (FLSA)?
Definition and differences between exempt or nonexempt
How is exemption status determined by Human Resources
Implications of noncompliance with the FLSA
Administrative guidelines to create a brand new position and
requesting job reevaluations
Total Compensation Philosophy
• Align with Marquette’s mission
• Meet the following objectives:
•
•
•
•
•
Mission driven
Internally equitable & externally competitive
Performance based
Valid & reliable
Consistent
• Compensation Program
•
•
•
•
Ten compensable factors used to classify positions
Broadband structure
Band placement is determined by PEQ evaluation
Placement within the band is determined by the market
What do you know about…
FLSA?
Fair Labor Standards Act (FLSA)
• Enacted in 1938
• Federal law which governs minimum wage, overtime pay,
recordkeeping, and child labor.
• The Wage and Hour Division of the US Dept. of Labor enforces
the FLSA.
• Almost every employee in the US is covered under FLSA.
• Covers
•
•
•
•
•
Overtime
Minimum Wage
Child Labor
Equal Pay
Recordkeeping
FLSA Continued
• Employees are entitled to be paid at least the Federal
minimum wage ($7.25 p/hour) as well as 1 ½ their regular rate
of pay for all hours worked over 40 in a workweek, unless an
exemption applies.
• The most common FLSA minimum wage and overtime
exemption applies to exempt employees who must perform
executive, administrative, or professional duties.
Exempt and nonexempt
• Employees who qualify as "exempt" are exempt from
overtime regulations (and minimum wage laws), whereas
"nonexempt" employees must be paid for every hour of
overtime they work.
• Non-exempt employees are normally required to account
for hours and fractional hours worked.
• Exempt employees must meet three tests for each
exemption: salary level, salary basis, and job duties.
*All Business (11/7/2004)
Exempt and nonexempt Cont.
• Exempt and nonexempt status has little to do with job
titles and whether an employee is salaried or receives an
hourly wage.
• The legal definition of "exempt" and "nonexempt" has
more to do with an employee's level of responsibility.
• In general, the more responsibility and independence or
discretion an employee has, the more likely the
employee is to be considered exempt.
Nonexempt Requirements
• Time worked recordkeeping
•
•
•
•
•
•
•
•
•
•
Time and day of week when workweek begins
Hours worked each day
Total hours worked each workweek
Basis on which wages are paid (i.e., per hour, piecework)
Regular hourly pay rate
Total daily or weekly straight-time earnings
Total overtime earnings
Additions to or deductions from wages
Total wages paid each pay period
Date of payment and pay period covered by payment
Exempt Requirements
• Three Tests for Exemption
• Salary level—minimum of $455 per week or $23,660 annually.
• Salary basis—regularly receives a predetermined amount of
compensation each pay period.
• Job duties
• Executive: primary duty is management.
• Administrative: performance of work directly related to general
business operations and exercises discretion.
• Professional: learned (requires advanced knowledge), outside
sales (making sales away from employer’s place), highly skilled
computer employees, creative (performance of work in an artistic
or creative field).
Examples of nonexempt and exempt
• Nonexempt
• Service maintenance employees
• Office coordinators/associates
• Nurses
• Exempt
• Professors
• Business Operations Managers
• Lawyers
Common FLSA Violations
• Compensatory time off
• Failure to pay for unauthorized hours worked
• Failure to pay for all recorded hours
• Inaccurate records
Implications of noncompliance with
the FLSA
• Department of Labor representatives investigate wages,
hours, and other employment practices.
• Burden of proof is on the employer.
• If violations are found, the employer may be subject to:
• Pay back wages
• In 2007, the Wage and Hour Division recouped over $220
million in back wages¹
• Fines
• Up to $10,000
• Civil money penalty of up to $1,000 for each such violation
• Liquidated damages
• Attorney’s fees and costs
•
1. Automatic Data Processing, 2008
How does HR classify positions?
1. Review job—what is the primary purpose of the position
and how do the duties fit with the purpose of the position?
2. Utilize resources—organization charts, compare to similar
university (and/or external) positions and other educational
institutions
3. Department of Labor and WI Department of Workforce
Development guides and articles
4. May seek advice from third party agency or legal counsel
Position Procedures
• Creating a brand new position
• Must receive verbal approval from the Dean, Provost or VP.
• Requesting department sends a Job Evaluation Request form,
completed Position Evaluation Questionnaire (PEQ), and a Job
Description to Human Resources.
• Human Resources will assign the job classification (according to
FLSA requirements), position code, and market salary range.
• Requesting job reevaluations
• Can be made for individual position or whole department/college .
• Requests can be made after 12 months or if significant changes to
the position have been made.
• Requesting department sends a Job Evaluation Request form,
completed PEQ, and an updated Job Description to Human
Resources.
• Human Resources will review classification and changes.
Questions….
Resources
• Compensation Program Resources
http://www.marquette.edu/hr/CompensationProgramResources.shtml
• UPP 4-01: Compliance with the FLSA
http://www.marquette.edu/upp/hr.shtml
• UPP 4-10: Flextime
http://www.marquette.edu/upp/hr.shtml
• US Department of Labor
http://www.dol.gov/whd/flsa/index.htm
Contact Information
Jennifer Burns
Compensation Manager
414.288-7935
Jennifer.burns@marquette.edu
Lynn Mellantine
Assistant Director
414.288.3430
lynn.mellantine@marquette.edu