7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition http://slidepdf.com/reader/full/solution-manual-for-strategic-compensation-a-human-resource-management-approach 1/30 CHAPTER 2 Contextual Influences on Compensation Practice Learning Objectives 1. Various laws that influence private sector companies’ and labor unions’ compensation practices 2. Contextual influences on the federal government’s compensation practices 3. Labor unions’ influence on companies’ compensation practices 4. Market factors’ impact on companies’ compensation practices Outline I. Employment Laws that Influence Compensation Practices A. Legislative Actions B. Four Amendments to the U.S. Constitution C. Government Makeup D. Four Key Legislative Themes E. Income Continuity, Safety, and Work Hours Laws F. FLSA of 1938 G. Pay Discrimination Legislation H. Equal Pay Act of 1963 I. Title VII of Civil Rights Act of 1964 J. Bennett Amendment K. Executive Order 11246 L. ADEA of 1967 M. OWBPA N. Executive Order 11141 O. Civil Rights Act of 1991 P. Accommodating Disabilities and Family Needs Q. PDA of 1978 R. ADA of 1990 S. FMLA of 1993 T. Prevailing Wage Laws U. Davis–Bacon Act of 1931 V. Walsh–Healey Contracts Act of 1936 25
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Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
%. 7ennett Amendment to 4itle II1. 9ecutive -rder 112&)
11. Age 0iscrimination in m:loment Act of 1%) ;A0A<
12. -lder 'or"ers 7enefit /rotection Act ;-'7/A<
1#. 9ecutive -rder 111&1
1&. Civil 6ights Act of 1%%1
15. Lill Led$etter Fair /a Act of 2%
1). 4he /achec" Fairness Act
1. Americans !ith 0isa$ilities Amendments Act of 28
18. 4he American 6ecover and 6einvestment Act of 2% ;A66A<
7. Four Amendments to the U.S. Constitution
1. Article 1, Section 8 ;=4he Congress shall have the :o!er>to regulateCommerce !ith foreign nations, and among the several States, and !iththe Indian 4ri$es>?<
2. First Amendment ;=Congress shall ma"e no la!s res:ecting anesta$lishment of religion, or :rohi$iting the free e9ercise thereof@ ora$ridging the freedom of s:eech, or of the :ress@ or the right of the :eo:le :eacea$l to assem$le, and to :etition the overnment for a redress ofgrievances.?<
#. Fifth Amendment ;=+o :erson shall...$e de:rived of life, li$ert, or
:ro:ert !ithout due :rocess of la!>?<
&. Fourteenth Amendment, Section 1 ;=+o state shall ma"e or enforce anla! !hich shall a$ridge the :rivileges or immunities of citiBens of theUnited States, nor shall an State de:rive an :erson of life, li$ert, or :ro:ert !ithout due :rocess of la!@ nor den an :erson !ithin its urisdiction the e3ual :rotection of the la!.?<
C. overnment *a"eu:
1. 4hree levels
a. Federal
b. State
c. Local
i. Count
ii. Cit
2. *ost com:ensation la!s are federal
3. State and local legislations may be concurrent or exist in absence of
similar federal laws
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
d. In 2%, Congress :assed an increase in federal minimum !age from5.15 in increments to .25
e. 2& states s:ecif higher minimum !age rates than federal level since2%
f. 'or"ers can legall earn less than minimum !age if the areG
i. Students em:loed in retail or service $usinesses, on farms, or ininstitutions of higher education
ii. 4rainees
iii. *entall or :hsicall disa$led
9am:leG FLSA 0efinition of 4rainees
• 4he training, even though it includes actual o:eration of the em:loers facilities, is
similar to that !hich !ould $e :rovided in a vocational school
• 4he training is for the $enefit of the trainee
• 4he trainee does not dis:lace regular em:loees $ut !or"s under closer su:ervision
• 4he em:loer :roviding the training gains no immediate advantage from the traineesactivities@ on occasion, the em:loers o:eration ma in fact $e hindered
• 4he trainee is not guaranteed a o$ at the com:letion of the training
• 4he em:loer and the trainee understand that the em:loer is not o$ligated to :a
!ages during the training :eriod
&. -vertime :a :rovisions
a. 0efined in FLSA
$. *ost em:loers must :a time and onehalf for over & hours !or" ina :eriod of consecutive das
c. FLSA 9em:t /ositions
i. 9ecutive
ii. Administrative
iii. Learned :rofessional
iv. Creative :rofessional
v. Com:uter sstem analst, :rogrammer, soft!are engineer, orsimilarl s"illed !or"ers
vi. -utside sales
d. Classifing o$s as either e9em:t or none9em:t is not al!as clearcut
9am:leG Su:reme Court CaseG 9em:t or +one9em:t /osition
J Aaron v. Cit of 'ichita, Eansas ruling on !hether fire chiefs !ere e9em:t
5. 9em:t :ositions
a. 6edefined $ U.S. 0e:artment of La$ors Fair /a 6ules in 2&
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
$. 9am:leG a!arding :a increases to $lac"s $ased on seniorit !hereas $asing increases on :erformance for !hites
&. 0is:arate im:act
a. 6e:resents unintentional discrimination that occurs !henever anem:loer a::lies em:loment :ractices to all em:loees
$. 4he :ractice leads to une3ual treatment of :rotected em:loee grou:s
5. 4itle II a::lies toG
a. Com:anies !ith 15 or more em:loees
$. m:loment agencies
c. La$or unions
d. La$or management committees controlling a::renticeshi: and training
9am:leG 4itle II mandates
• =It shall $e an unla!ful em:loment :ractice for em:loers toG
• Fail or refuse to hire or to discharge an individual, or other!ise to discriminate
against an individual !ith res:ect to that individuals com:ensation, terms,conditions, or :rivileges of em:loment, $ecause of such individuals race, color,religion, se9, or national origin
• Limit, segregate, or classif a com:ans em:loees or a::licants for em:loment
in an !a !hich !ould de:rive or tend to de:rive an individual of em:lomento::ortunities or other!ise adversel affect that individuals status as an em:loee,
$ecause of such individuals race, color, religion, se9, or national origin?
In 2%, Congress :assed t!o maor Acts to hel: further close the :a ga: $et!een menand !omenG
• 4he Lill Led$etter /a Act restored :rior la!D:roviding that a :a discrimination
charge must sim:l $e filed !ithin 18 das of a discriminator :achec". 4hishel:ed to reverse the Su:reme Court Led$etter decision, !hich made it harder for!omen and other !or"ers to :ursue :a discrimination claims
• 4he /achec" Fairness Act hel:s to strengthen the 3ual /a Act of 1%)# $
strengthening the remedies availa$le to :ut se9$ased :a discrimination on :ar !ith
race$ased :a discrimination. 4hat is, em:loers are no! re3uired to ustif une3ual :a $ sho!ing that the :a dis:arit is not se9 $ased, $ut, rather, o$ related. 4hisAct also :rohi$its em:loers from retaliating against em:loees !ho share salarinformation !ith their co!or"ers
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1. Allo!s female em:loees to charge em:loers !ith 4itle II violationsregarding :a onl !hen the em:loer has violated the 3ual /a Act of1%)#
2. Added to 4itle II $ecause legislators could not agree onG
a. 'hether or not 4itle II incor:orates $oth the 3ual /a Act of 1%)#se3ual :a standard and the four defenses for une3ual !or"
i. Seniorit sstem
ii. *erit sstem
iii. arnings $ased on 3ualit or 3uantit of :roduction
iv. /a differential not $ased on gender
$. 'hether or not 4itle II includes onl the aforementioned four 3ual/a Act of 1%)# e9ce:tions
E. 9ecutive -rder 112&)
1. 9tends 4itle II standards to com:anies holding federal governmentcontracts !orth more than 1, :er ear
2. 6e3uires com:anies !ith federal contracts !orth more than 5, :erear and 5 or more em:loees to develo: a !ritten affirmative action :lan that !ill s:ecif ho! the com:anies !ill avoid or reduce 4itle IIdiscrimination violations over time
L. Age 0iscrimination in m:loment Act of 1%) ;A0A<
1. Amended in
a. 1%8
$. 1%8)
c. 1%%2. 0esigned to :rotect !or"ers age & and older ;=$a$ $oomers?< from age
discrimination
a. =7a$ $oomers? are those $orn $et!een 1%&2 and 1%)&
i. 6e:resent the largest generation of the U.S. :o:ulation
ii. Will probably work past age 67
$. United States Census 7ureau :redicts that
i. 7 21, those older than )5 !ill num$er a$out 25 million ;12.& :ercent of the :o:ulation<
ii. 7 25, that num$er !ill reach a$out million ;2.#:ercent ofthe :o:ulation<
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
i. Assists em:loers avoid discrimination :ractices through the 4echnicalAssistance 4raining Institute
/. Accommodating 0isa$ilities and Famil +eeds
1. /regnanc 0iscrimination Act of 1%8 ;/0A<
2. Americans !ith 0isa$ilities Act of 1%% ;A0A<
#. Famil and *edical Leave Act of 1%%# ;F*LA<
P. /regnanc 0iscrimination Act of 1%8 ;/0A<
1. An amendment to 4itle II of the Civil 6ights Act of 1%)&
2. /rohi$its dis:arate im:act discrimination against :regnant !omen for allem:loment :ractices
#. m:loers must not treat :regnanc less favora$l than other medicalconditions covered under em:loee $enefits :lans
&. m:loers must treat :regnanc and child$irth the same !a the treatother causes of disa$ilit
5. /0A :rotects !omens rights !ho ta"e leave for :regnancrelatedreasons
a. Credit for :revious service
$. Accrued retirement $enefits
c. Accumulated seniorit
6. Americans !ith 0isa$ilities Act of 1%% ;A0A<
1. /rohi$its discrimination against individuals !ith mental or :hsicaldisa$ilities !ithin and outside em:loment settings includingG
a. /u$lic services
$. 4rans:ortation
c. /u$lic accommodations
d. m:loment
2. A::lies to em:loers !ith 15 or more em:loees
#. -C is the enforcement agenc
9am:leG A0A and em:loment
J 4he ruling states the A0AG
J =>:rohi$its covered em:loers from discriminating against a Q3ualified individual !ith adisa$ilit in regard to o$ a::lications, hiring, advancement, discharge, com:ensation,training, or other terms, conditions, or :rivileges of em:loment. m:loers are re3uired
to ma"e @ Qreasona$le accommodations to the "no!n :hsical or mental limitations of another!ise 3ualified individual !ith a disa$ilit unless to do so !ould im:ose and Qunduehardshi:?
&. =6easona$le accommodations? ma include such efforts asG
a. *a"ing e9isting facilities readil accessi$le
$. No$ restructuring
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5. A =3ualified individual !ith a disa$ilit? must $e a$le to :erform the=essential functions? of a o$, !hich are those o$ duties that are critical tothe o$
9am:leG A0A and reasona$le accommodations
J /roducing :rinted memoranda is a "e dut of a clerical !or"ers o$
J *ost clerical !or"ers manuall "e the information into the com:uter
J An em:loee comes do!n !ith cri::ling arthritis
J m:loer ac3uires voice recognition soft!are for this em:loee to in:ut information
In Se:tem$er 28, /resident eorge '. 7ush signed into la! the Americans !ith 0isa$ilitiesAct of 28. 4he main effect of this legislation is that it is no! easier for an individual see"ing :rotection under the A0A to esta$lish that he or she has a disa$ilit !ithin the meaning of theA0A.
S. Famil and *edical Leave Act of 1%%# ;F*LA< ;more in cha:ter 12<
1. F*LA !as designed to :rovide em:loees !ith o$ :rotection in cases offamil or medical emergenc
2. uarantees un:aid leave and the right to return to either the same :ositionor a similar :osition !ith the same :a, conditions, and $enefits
4. /revailing 'age La!s
1. Davis–Bacon Act of 1931
2. Walsh–Healey Contracts Act of 1936
U. 0avis7acon Act of 1%#11. sta$lished em:loment standards for construction contractors holding
federal government contracts valued at more than 2,, includingG
a. (igh!a $uilding
$. 0redging
c. 0emolition
d. Cleaning, :ainting, andKor decorating :u$lic $uildings
2. A::lies to la$orers and mechanics !ho are em:loed onsite
#. 6e3uires contractors to :a the :revailing !age in the local area
&. U.S. Secretar of La$or a. 0etermines :revailing !age rates
$. 7ased on com:ensation surves
5. /revailing !age is the t:ical hourl !age :aid to more than 5 :ercent of all la$orers and mechanics em:loed in the local area
). 6e3uires contractors to offer fringe $enefits e3ual in sco:e and value tothose offered in the local area
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
U.S. 4reasure 6egulations define the term officer as follo!sG
enerall, the term officer means an administrative e9ecutive !ho is in regular and continued service.4he term officer im:lies continuit of service and e9cludes those em:loed for a s:ecial and singletransaction. An em:loee !ho merel has the title of an officer $ut not the authorit of an officer isnot considered an officer for :ur:oses of the "e em:loee test. Similarl, an em:loee !ho does not
have the title of an officer $ut has the authorit of an officer is an officer for :ur:oses of the "eem:loee test. In the case of one or more em:loers treated as a single em:loer under sections&1&;$<, ;c<, or ;m<, !hether or not an individual is an officer shall $e determined $ased u:on hisres:onsi$ilities !ith res:ect to the em:loer or em:loers for !hich he is directl em:loed, and not!ith res:ect to the controlled grou: of cor:orations, em:loers under common control, or affiliatedservice grou:.
7. m:loee 6etirement Income Securit Act of 1%& ;6ISA<
1. Established to regulate the implementation of various employee benefits
programs, including:
a. Medical
b. Life
c. Disability
d. Pension
2. ERISA addresses:
a. Employers’ reporting and disclosure duties
b. Funding of benefits
c. Fiduciary responsibilities of programs
d. Vesting rights
3. Companies must:
a. /rovide their em:loees !ith straightfor!ard descri:tions of their
em:loee $enefit :lans $. /rovide u:dates !hen su$stantive changes to the :lan are im:lementedc. /rovide annual sno:ses on the financing and o:eration of the :lansd. /rovide advance notification if the com:an intends to terminate the
$enefits :lane. *eet strict guidelines to ensure having sufficient funds !hen
em:loees reach retirementf. +ot engage in transactions !ith :arties having interests adverse to
those of the reci:ients of the :lan and not deal !ith the income orassets of the em:loee $enefits :lan in the com:ans o!n interests
4. esting refers to an employee’s acquisition of non-forfeitable rights to an
employer’s contributions to fund pension benefitsa. Employees often must be 100 percent vested within three to six years
of service, depending on the vesting schedule
b. One hundred percent vested means that an employee cannot lose the
pension benefits even if the employee leaves the job before retirement
c. Two minimum criteria for eligibility under ERISA:
i. Employees must be allowed to participate in a pension plan after
they reach age 21
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
b. Enables workers to maintain their standards of living by adjusting
wages for inflation
3. Union influence has declined because:
a. Union companies demonstrated consistently lower profits than
nonunion companies
b. Major employment cuts in highly unionized companies, like:
i. Automobile industry
ii. Steel industry
c. Foreign automobile manufacturers produced high quality vehicles
4. Spillover effect, the benefit packages that are similar to local union
benefits that nonunion employers give employees in the hopes of keeping
their employees from unionizing
5. Union switch to concessionary bargaining where the bargaining focuses
more heavily on promoting job security than on securing large pay
increases
Effects of t(e Recession on )or% *otor Compan'
Com:anies !ith la$or unions often tr to avoid instituting mass laoffs !henever :ossi$le $ecause of recall features in the collective $argaining agreement. In other !ords, management ise9:ected to rehire most of its laid off !or"ers !hen $usiness conditions re$ound. (o!ever, !iththe dee: recessionar :eriod that $egan in 0ecem$er 2 and ended in Nune 2%, com:aniesstill are tring to ma"e :ermanent cuts to their !or"forces for su$stantial la$or force savings.
In earl 2%, in res:onse to this dire situation, Ford *otor Com:an announced to local union
leaders that it !ould ma"e $uout or earl retirement offers to all of its &2, U.S. hourl!or"ers. 4hese cuts !ere :art of a series of contract concessions in a tentative agreement reached $et!een the United Auto 'or"ers union and Ford *otor Com:ans management. In addition,the union agreed to a sus:ension of costofliving :a raises and lum:sum :erformance $onusesin the remaining three ears of the recentl negotiated collective $argaining agreement.
Example+ ,eneral *otors Corporation
In 211, the management of eneral *otors Cor:oration argued the need to ado:t :afor :erformance :rograms for its union !or"force. /afor:erformance sstems a::l to nonunionsalaried !or"ers@ thus, the union !or"force is not $eing singled out !ithin the com:an. If theUnited Auto 'or"ers !ere to agree to the use of a :afor:erformance :rogram, this change!ould re:resent et another note!orth concession.
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
1. Identify the contextual influence that you believe will pose the greatest
challenge to companies’ competitiveness and identify the contextual influence
that will pose the least challenge to companies’ competitiveness. Explain your
answer.
This is a very subjective question and answers can include things ranging from
discussions of laws, politics, economics or other contextual influences.
2. Should the government raise the minimum wage? Explain your answer.
Answers can be pro or con. ‘Yes’ answers should discuss living or competitive wages
among other things. ‘No’ answers should include impact on business and employment
levels.
3. Do unions make it difficult for companies to attain a competitive advantage?
Explain your answer.
Unions do make it difficult for companies to attain competitive advantage in some
regards because companies must abide by certain rules and regulations and are prohibited
from forcing their workers to do work beyond their agreed quota, and for benefits or
wages that are lower then their quota. Also, competition between a company that is
housed within the United States and a company in another country without a union could
result in difficulties for U.S. companies. However, such policies are declining as the
percentage of overall U.S. civilian worker representation in labor unions continue to fall.Although unions make it difficult, their effect does not limit the capabilities of a company
to any great extent.
4. Select one of the contextual influences presented in this chapter. Identify a
company that has dealt with this influence, and conduct some research on the
company’s experience. Be prepared to present a summary of the company’s
experience in class.
A sample answer: There have been many compensation issues in collective bargaining,
such as the steady decline in wages after the 1980s. Delta Air Line pilots went on strike
to try and increase their wages, but ended up agreeing to substantial cuts in base pay as
well as in future retirement income in order to help the company avoid dissolution. This
sort of agreement is called concessionary bargaining, for the company spent more heavily
on job security than large pay increases. The main reason why the pilots agreed to these
terms was because they did not want to lose their jobs.
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition
5. Some people argue that there is too much government intervention, whereas
others say there is not enough. Based on the presentation of laws in this
chapter, do you think there is too little or too much government
intervention? Explain your answer.
One could argue that the government doesn’t do enough to intervene based on the factthat although many laws, acts, and decrees protect employees and employers alike, it is
difficult to focus attention on some matters. Increases in wages, for example, may be
something that the government ought to look into more closely and with more severity.
Wages are a great source of struggle and anguish for many people. If the government
increases wages in line living costs, then all would be well, but this is not always the
case. However, one could also argue that the government gets involved in such issues too
readily, and that sometimes it’s best for the employees and employers to work out their
differences on their own.
VII. End of Chapter Case; Instructor Notes and SuggestedStudent Responses
Case Name: Exempt or Nonexempt?
Questions
;1< 'h did Am classif the shift leaders as e9em:t Are there anadvantages to Nones 0e:artment Store to having the shift leaders classified ase9em:t
;2< 0o ou thin" that the shift leaders are :ro:erl classified as e9em:t 'hor !h not;#< 'hat are some factors that Am should consider !hen determining if shiftleaders are e9em:t or none9em:t
Instructor -otes
The Fair Labor Standards Act (FLSA) addresses the issues of minimum wage, overtime
pay and child labor. The FLSA requires employers to properly classify employees as
Non-exempt (covered by the Act) or Exempt (not covered by the Act). Many companies
want to classify workers as Exempt to avoid the requirement to pay overtime. While the
company has the responsibility to properly classify employees, the decision needs to be
made based on the responsibilities of the job. The Department of Labor (DOL) has
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7/17/2019 Solution Manual for Strategic Compensation a Human Resource Management Approach 7E 7th Edition