1. Chapter 2 Part 1: Contextual Influences on Pay MGT 4543 Compensation Management

2. Be prepared… Today, I will call on you for answers. Borrow a book if you do not have one yet. Please do NOT read the answer from your book when I call on you. We want to stay awake! What if you did not prepare for today’s class? – My best advice is to follow along, try to keep up, and THINK of a logical answer if you are called on. That is MUCH better than saying the dreaded, “I don’t know” or “I don’t have a book yet.”

3. Contextual Influences on Pay Why are employment laws needed? What major event in history led to the passage of legislation to protect workers?

4. Contextual Influences on Pay In what 3 major pieces of legislation did it result? Explain the purpose of each. What three broad issues did the FLSA address?

5. Contextual Influences on Pay Explain exempt and non-exempt categories. What are the six categories of exemption from the FLSA?

6. Contextual Influences on Pay READ Table 2 -3 for compensable work activities; provide several examples.

7. Class activity: A closer examination of the FLSA Read the following scenarios and apply the FLSA You can use your text book as well as your cellphone/tablet/laptop to search the Internet. www.flsa.com/coverage.html http://www.dol.gov/whd/regs/compliance/fairpay/faq_PF.ht m http://www.dol.gov/whd/regs/compliance/fairpay/faq_PF.ht m

8. Question 1 Velma is a senior manager at Mystery Inc. who earns an annual salary of $50,000. She directs the work of three junior investigators and decides whom to hire and fire. Velma is contemplating having LASIK eye surgery and a tummy tuck. Although she has no leave time available to her, she has left work early six times in the last month to consult with numerous surgeons. Velma's supervisor, Fred, believes her absences constitute an abuse of time and has docked her pay every time she was gone from the office for more than two hours. Is this OK? 1) No. She should be reimbursed for all time missed. 2) Yes. Her absences are excessive and her status as an exempt employee does not protect her from being disciplined. 3) Yes. Velma is not an exempt employee because she does not meet the primary duties test for an exempt executive. 4) It depends on whether she will look and feel better with 20/20 vision and a flat tummy.

9. Question 2 Mystery Inc. has a written policy prohibiting improper deductions. Employees receive a copy of the policy in their employee handbook. The payroll department has told Fred to stop docking Velma for partial day absences, but he continues to dock her pay for half-day absences because she hasn't complained about the deductions. He tells the payroll department that he will continue docking Velma's pay until she gets the message and will do the same with any employee who doesn't follow his rules. Will Fred's actions impact Velma's status as an exempt employee? 1) No. The regulations provide that employers forfeit an employee's exempt status only if they continue making improper salary deductions after an employee has complained about those deductions. Velma hasn't complained, so there's no problem. 2) Yes. Fred has an actual practice of making improper pay deductions, which demonstrates that he does not intend to pay employees on a salary basis. In fact, Fred's practice may affect the exempt status of other employees in the same job classification who report to him. 3) No. Once she has the surgery and can see her paycheck, you can bet she'll be mad and complain. However, it shouldn’t affect her exempt status.

10. Question 3 Finally, Fred realizes that he has erred and must reimburse Velma for the time he docked her. He is frustrated with the situation and calls the HR Department seeking advice on what to do if this pattern continues. Specifically, he wants to know whether he can suspend Velma without pay for two days for time abuse. What should HR tell him? 1) Absolutely. 2) Absolutely not. 3) Maybe. 4) Only after she has the surgery.

11. Question 4 Vincent is an exempt executive at Mystery Inc. who makes $1,000 per week. He is also a reservist in the National Guard. One weekend a month, Vincent reports for Guard duty, for which he is paid $50 per day when he is on duty. On those weekends, he also misses work on Monday due to his military responsibilities. What is the minimum amount that Mystery Inc. can pay Vincent during those weeks? 1) $950 2) $800 3) $1,000 4) $2,000 - he should be rewarded with extra compensation for serving his country.

12. Question 5 Shaggy, a recent law school graduate who just passed the bar exam, has been hired by Mystery Inc. as a staff attorney in their white-collar crime unit. He makes an annual salary of $20,000 a year. He comes to your office complaining that he is one of the most educated employees in his division and has been working 50 to 60 hours a week for the last few months and is entitled to overtime pay for all the extra time he has worked. Is he? 1) Yes. He is not an exempt employee because he does not meet the minimum pay requirements under the salary basis test. He is entitled to overtime for all hours worked in excess of 40 hours a week. 2) No. Lawyers are exempt employees under the FLSA. 3) No. He just graduated from law school and should be happy he has a job.

13. Question 6 Scooby, a senior executive, recently drove two junior investigators to a client meeting the company van. It has come to your attention that Scooby drank 5 beers while driving to the client's office and nearly rear-ended another vehicle. You decide to send him a serious message that his behavior will not be tolerated by docking his next paycheck by $500. Is that permissible under the FLSA? 1) No. The only way you can reduce Scooby’s pay to punish him for his behavior is to suspend him in full-day increments without pay. 2) Yes. His behavior was a serious violation of a major safety rule prohibiting the consumption of alcohol while driving a vehicle on company-related business. 3) No. He didn't actually have an accident or get arrested.

14. Question 7 Daphne has headed up the recruiting department of Mystery Inc. for about a year. She is in charge of hiring, firing, and training new investigators as well as supervising three administrative employees. Daphne makes a base salary of $850 bi-weekly. She is also eligible for a monthly bonus of $1,000 if her department meets its recruiting goals, which it always has under her leadership. She also receives a weekly cafeteria pass worth $35. So Daphne's total bi-weekly compensation is$1,420. The new human resources director is reclassifying all the employees and is not sure what to do with Daphne's status. Is she an exempt or nonexempt employee? 1) Nonexempt. Her job duties meet the criteria for exempt status but her salary does not meet the minimum salary requirements for exempt status under the FLSA. 2) Exempt. Both her job duties and her salary meet the criteria for exempt status under the FLSA. 3) If the HR director doesn't know, how should I?

15. Question 8 Fred is a senior mechanic employed by Mystery Inc. in their transportation department. He is married to the owner's daughter and they have six children. Fred's annual salary is $115,000 and he brings home over $2,000 on a weekly basis. His primary job duties consist of repairing, cleaning, and detailing the fleet of company vehicles. He also frequently oversees the work of three junior mechanics. Recently, a number of vehicles have been involved in serious accidents requiring Fred and his staff to each work 50 - 60 hours per week to complete the necessary repairs. Is Fred entitled to overtime pay for the additional hours worked? 1) No. He is a highly compensated employee who regularly performs exempt supervisory duties. 2) Yes. It does not matter how much he makes because he is a manual laborer and is therefore non-exempt. 3) No. The owner will give him money when he needs it because he wants to keep his daughter happy.