FreshView
a publication of Cascade Employers Association
JULY 2012
Dollars & Sense Poll |
In This Issue:
- Upcoming Wage/Salary Increases
- FreshView on Benefits
- Survey Spotlight
- Employers Were Waiting To Address Health Reform
Upcoming Wage/Salary Increases
By Jerry E. Bumgarner, CCP
Director, Research and Compensation Services
jbumgarner@cascadeemployers.com
For many organizations, the budgeting season has arrived and one line item that is getting lots of attention is wage/salary reviews. Current data to support this effort is being collected right now through Cascade’s annual Salary Budget Survey (click to participate) and is also available through sources like Worldatwork, Milliman and others. Human Resources and Compensation professionals diligently review this information to make budget recommendations and to make specific plans for their next cycle of pay adjustments.
Whereas Salary Budget Surveys are good indicators of general market movement, they are not necessarily good indicators of market movement for specific jobs. Therefore, one of the biggest challenges faced by HR professionals is how to know when the survey data is indicating that the salary for a job is moving up, staying flat or going down in the market. The answer to this more specific question can be determined by reviewing benchmark job surveys such as the Oregon Regional Pay Survey by SalaryTrends®.
In using benchmark pay surveys, the best advice is to look beyond the individual job of interest and beyond the point in time when the data is collected. If the salary for a job has risen 8%, does that mean the market is on fire? Probably not! Changes in participating employers and demographics can contribute to a certain amount of unusual outcomes. Looking back at a few years of survey data for the same job is a good way to spot a trend versus a single year flash. Likewise, looking at similar jobs in closely aligned job families can also shed light on the broader market trend.
Good benchmark jobs (those that are common to many organizations) tend to have less annual variance attributable to demographic shifts. Sample sizes for benchmark jobs are typically relatively high, thus buffering the data against the impact of participant fluctuations. By looking at data for the best benchmark jobs in a survey and comparing that against salary data for the same jobs in prior years, real trends can be identified.
Regardless of what the data is saying (assuming data is available), common sense will tell you that if employees for certain jobs are difficult to attract and retain, these jobs are the likely suspects for a longer-term upward trend in salaries paid. Why? Because the wages/salaries paid for jobs are still driven by the supply and demand for the talent needed to perform those jobs.
Right now, according to George Gmach, a compensation specialist with Trusight, Inc. of Plymouth MN, the likely suspects tend to be in finance/accounting, IT, Technical/Engineering and skilled trades. “The common thread seems to be that jobs requiring quantitative skills in general seem to have a smaller labor supply,” according to Gmach.
FreshView on Benefits
By Jenna Reed, JD, MBA
Director, HR & Compliance Services
jreed@cascadeemployers.com
Question: When my company requires a non-exempt employee to carry a cell phone for after-hours or weekend services, we pay a flat rate of $150 in addition to their actual hours worked, if any. Should we calculate that fee into the overtime calculation?
Answer: Yes. Under state and federal law, when a non-exempt employee works over 40 hours in a workweek they must receive overtime pay at one and one-half times their regular hourly rate.
This rate includes shift differentials, non-discretionary payments, piece rates, and supplementary payments. For example, if an employee makes $10.00 per hour and works 50 hours the employee is entitled to $550 (50 hours at $10.00/hour and 10 hours at $5.00/hour). Paying an additional flat rate of $150 for carrying the cell phone changes the calculation.
In a second scenario, the employee’s regular rate of pay is $500 (50 hours at $10.00/hour); the addition of the $150 for carrying a cell phone makes the total $650. This total divided by 50 hours is $13.00. The employee is now entitled to $715 (50 hours at $13.00/hour and 10 hours at $6.50).
Survey Spotlight
By Tina Hamel, Survey Manager
thamel@cascadeemployers.com
SalaryTrends® surveys from Cascade Employers Association cover the pay practices of diverse organizations from various markets (Oregon, SW Washington, Northwest Regional, and National), and include multiple relevant data summaries. These valuable tools enable users to evaluate their competitiveness within specific talent markets.
Now Open for participation:
- National Salary Budget Survey (closes August 17th)
- Oregon Regional Pay Survey (Always Open)
Opening Soon for participation:
- Sales Compensation Survey (Coming in September)
Contact us with questions at surveys@salarytrends.com.
Employers Were Waiting To Address Health Reform
Source: Mercer/CCH
The majority of employers said that they had been waiting for the Supreme Court’s decision on the Patient Protection and Affordable Care Act (ACA) before developing a strategy to respond to ACA provisions that go into effect in 2014 and beyond, according to a recent poll from human resource consultant Mercer. While 40 percent said they will begin taking action now that the Court has ruled, another 16 percent said they will continue to wait until after the November elections.
Employers should act quickly to implement the new ACA requirements for 2012 and 2013, Mercer noted, such as providing benefit summary disclosures, providing the cost of health coverage on employees’ W-2s, and complying with new dollar limits on health care flexible spending arrangements. But the rules going into effect in 2014 that are aimed at expanding access will have broader implications for many employers, according to Mercer.
The poll found that 28 percent of employers said that compliance with the new requirement that employees working an average of 30 or more hours per week must be eligible for coverage will present a “significant challenge” for their organization.
“Employers with large part-time populations, such as retailers and health care organizations, are faced with the difficult choice of either increasing the number of employees eligible for coverage, or changing their workforce strategy so that employees work fewer hours,” said David Rahill, president of Mercer’s Health and Benefits business. “With the average cost of health coverage now exceeding $10,000 per employee, a big jump in enrollment is not economically feasible for many employers.”
The ACA requires employers with more than 200 full-time employees who offer enrollment in one or more health plans to automatically enroll new employees in one of the plans offered. Employees will automatically be covered unless they take action to opt-out, and this provision is expected to increase the rolls of the insured for many employers. Nearly one-third (29 percent) of respondents to the Mercer survey said this will be a significant challenge.
Mercer found that the provision that has the most employers worried – 47 percent of survey respondents – is the excise tax on high-cost plans, expected to go into effect in 2018.
“Employers already struggling with annual health care cost increases of double or triple general inflation are determined to avoid this tax,” said Sharon Cunninghis, U.S. leader of Mercer’s Health and Benefits business. “We’ve been seeing a lot more interest in cost-saving measures, such as consumer-directed health plans and employee health management, since the tax was proposed.”
When asked whether they agreed or disagreed with the statement, “[The reform law] has provided the impetus for our organization to pursue more aggressive health benefit cost-management strategies,” 52 percent agreed. Employer actions were one factor that helped to slow health benefit cost growth in 2011 relative to 2010.
Survey results suggest this trend will continue. Asked whether they planned to be more aggressive about managing plan costs going forward now that the constitutionality of the ACA has been confirmed, 54 percent said yes. And while 41 percent said no, Mercer noted that it is only because the employer was already taking aggressive action to manage expenses.
Mercer polled more than 4,000 employers immediately following the Supreme Court’s decision.
©2012 Cascade Employers Association. All rights reserved.
SalaryTrends® is a trademark of Cascade Employers Association.
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