Category Archives: compensation

Seattle OKs $15 Hourly Minimum Wage

Seattle’s city council unanimously approved an increase in the city’s minimum wage to $15 an hour yesterday afternoon, making it the nation’s highest by far, according to CNN Money.

The increase was formally proposed by Seattle Mayor Ed Murray, and his spokesman said he intends to sign the ordinance later today, according to the report, which adds that Washington already has the nation’s highest state-level minimum wage, at $9.32. That rate also applies to the city.

The current federal minimum wage is $7.25.

CNN reports the pay hike in Seattle will take place over several years, based on a scale that considers the size of and benefits offered by an employer, and it will apply first to many large businesses in 2017 and then to all businesses by 2021.

According to a piece in the Seattle Times, the pay hike now moves the region’s employers — and their workers — into terra incognita:

“No city or state has gone this far. We go into uncharted territory,” said Seattle City Council member Sally Clark before the council agreed to give workers a 61 percent wage increase over what is already the country’s highest state minimum wage.

While the move was cheered by various groups representing workers’ interests, USA Today reports the Seattle Chamber of Commerce initially pushed back against the plan, and in February released the results of a survey of 283 area employers that found there may be some negative repercussions stemming from the pay hike, including:

  • Small businesses will be greatly impacted: 37 percent of employers offering less than $15/hour in total compensation have 50 or fewer employees;
  • Most companies will make more than one change in response to the increase: 60 percent of companies will consider multiple changes (reduce/eliminate new positions, increase standards for entry level positions, reduce/eliminate benefits); and
  • Prices will go up: 50 percent of companies will increase prices for goods and services to offset a rise in the minimum wage.

The first increase will reportedly occur on April 1, 2015, and will bring the minimum wage to $10 for some businesses and $11 for others.

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A Few Takeaways from Total Rewards 2014

WorldatWork has expanded its focus in recent years to include “total-reward” issues such as healthcare, financial wellness and work/family as part of its overall mix. But as anyone who’s attended the association’s annual conference lately knows, no one can ever accuse the Scottsdale, Ariz.-based association of abandoning its roots in compensation. (Some of you will no doubt remember the days when WorldatWork was named the American Compensation Association — and pretty much exclusively focused its attention on comp.)

totalrewards2014-500x334Certainly, those roots were evident this week at WorldatWork’s Total Rewards 2014 Conference & Exposition at the Gaylord Resort in Dallas, which attracted around 1,500 attendees.

Comp-specific sessions at this year’s event ranged from the tactical “Compensation as a Career” to the more strategic “Executive Rewards Trends and Predictions,” which I tried to attend but was turned away from at the door because, I was told, every seat had been taken.

I was able find a seat at an earlier session on Monday titled “The Danger of One-Size-Fits-All Executive Compensation,”  which included as presenters Steve Harris, managing director of Frederic W. Cook & Co., and Brynn Evanson, executive vice president of HR at J.C. Penney. (Evanson previously headed comp, benefits and talent operations at JCP and replaced Dan Walker as its top HR leader in April 2013. Some of you may remember Walker earned a whopping $20 million during his first and only year as JCP’s top HR executive and departed soon after Ron Johnson was ousted as CEO in early 2013)

I was especially interested to hear how JCP was tackling executive comp these days, considering all its been through. (In what has to be described as perfect timing, JCP reported its first decent quarter in quite some time last week, suggesting that its turnaround might have entered a new phase.)

Harris suggested that employers would be making a mistake were they to let the forces at work today, such as increased government oversight and the efforts of proxy advisory firms, significantly influence what they do — and, more importantly, don’t do.  Considering no two companies have the same challenges and business objectives, he said, there’s a real danger of “falling into the trap” of “sameness” when it comes to exec comp.

Of course, he said, it’s not all bad to be formulaic, but it’s also not all good.

When you look at the pay-mix charts today, Harris said, you don’t see a whole lot of difference between your company and the median company.

True, he said, being somewhere in the middle goes a long way toward preventing scrutiny, but that doesn’t mean it’s the best approach.

Harris stressed the downside of formulaic incentive plans that emphasize pre-established goals and downplay comp-committee discretion and judgment in determining payouts. Following a herd mentality, he said, can often stifle innovation and undermine an organization’s ability to achieve its business’ objectives.

Instead, Harris said, employers need to be able to balance shareholder support for performance against proxy-adviser angst, use good business judgment and “manage the influence of peer comparisons.”

As Evanson made clear in her remarks, as far as executive comp is concerned, flexibility has been an important factor in JCP’s turnaround efforts.

As most of you are aware, JCP has seriously underperformed against its peers in recent years, with its stock price going from $36 in 2011 to around $8 today. During that period, the Plano, Texas-based retailer went from being a coupon- and discount-based retailer in 2011, with Mike Ullman at the helm; to a lowest-price retailer in 2012, with Ron Johnson in charge; back to being a coupon- and discount-based retailer in 2013 and 2014, again with Mike Ullman leading the firm.

Each phase required a very different strategy, Evanson told attendees.

As part of JCP’s turnaround efforts, Evanson said, JCP has recently been using spot awards for top talent, promotions, and learning and development to hold onto key talent.

(Before moving on, I probably should mention a story in the Dallas Morning News that reported  all of “the hiring and firing in 2011 and 2012 cost Penney $236 million in bonuses, stock awards, transition and termination pay: $171 million for officers and $65 million for other corporate executives.”)

I also had a chance to speak on Monday with Mercer Senior Partner Steven Gross and Partner Mary Ann Sardone prior to their session titled “Learnings from Managing Global Talent, Compensation and Benefits.”

On the global-comp front, Gross said, employers are focused on “segmentation” and “figuring out how money gets allocated, especially for many of the more critical positions.”

Recognizing critical workforce segments is a core component of a successful total-rewards strategy, Gross said.

He also said it’s no coincidence that the expo hall at WorldatWork has so many rewards-and-recognition vendors exhibiting, since compensation budgets aren’t expanding and companies are looking for other cost-effective ways to acknowledge the efforts of employees. (Achievers, BI Worldwide, Globoforce, O.C. Tanner, MTM and Michael C. Fina were among the dozens of exhibitors at the show in this space.)

In an effort to successfully align comp with business and talent strategies, Sardone said, she’s seeing more and more companies attempting to create “an eco system” across their organizations, where comp and talent management are more regularly talking to each other.

Mercer released this week its Total Rewards Survey, which suggested that companies still have a lot more work to do when it comes to aligning comp to business priorities. While more than half (56 percent) of organizations surveyed said they made a significant change to their total-rewards strategy in the past three years, less than one-third (32 percent) said their total rewards and business strategies were fully aligned.

It is critical that the rewards strategies of companies align with their business strategies to achieve overall success, Gross said.

On Tuesday, I also sat in on a session titled “An Insider’s Guide to Compensation Committee Meetings,” during which a panel of experts shared a few common-sense best practices HR and comp leaders might want to keep in mind as they work with their comp committees.

Robin Colman, vice president of compensation, benefits and HR operations at eBay, pointed out that it’s important for the comp person to know the preferences, biases and points of view of the people in the room and adjust his or her approach accordingly. Often, she said, that includes knowing what committee members might be seeing and hearing at other boards they may be sitting on.

John England, managing partner at Pay Governance LLC, a consulting firm that works with comp committees, advised those working with their comp committees not to be “another personality” in the room, since there are enough “personalities” in the room already.

If you have something to share, he advised, make sure no one is ever surprised.

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Yes, Money Still Matters

E000249For a few years now—especially since the 2008 financial meltdown that ushered in the Great Recession—we’ve heard how pay has become a smaller factor in determining employees’ overall happiness with their jobs.

But, in what could be seen as an indicator of order slowly being restored to the universe, it looks like the money matters most to workers once again.

That’s according to a just-released survey from the Alexandria, Va.-based Society for Human Resource Management. In a poll of 600 randomly selected employees at companies of all sizes, SHRM found 60 percent of respondents citing compensation/pay as the biggest contributor to job satisfaction. According to SHRM, compensation/pay last topped this list during the pre-recession period of 2006 and 2007.

In addition, 56 percent of employees reported receiving a raise in the last year, a six-percentage point increase from 2012. A smaller percentage, however (36 percent), indicated receiving a bonus in the last 12 months; a drop of three percentage points in comparison to 2012.

“Incomes have grown slowly since the recession, and that undoubtedly is having an impact on workers’ priorities and [is] one explanation for the leap to the forefront by compensation,” said Evren Esen, director of SHRM’s Survey Research Center, in a statement.

Esen pointed out that four generations of employees listed compensation/pay as either the first- or second-ranked aspect of job satisfaction. With the exception of executives, employees at all job levels ranked it as one of the top three contributors to overall job satisfaction. At 59 percent, the opportunity to use skills and abilities was the second-most cited factor, tied with job security.

Yes, cash may be king once again. But, as always, there are more variables in the job satisfaction equation. Overall, 81 percent of survey participants said they were satisfied with their current jobs, with many expressing optimism about the future. For example, 79 percent of respondents indicated they were determined to accomplish their work goals and were confident they could meet them. Further, 73 percent said they were satisfied with their relationships with their co-workers, and 70 percent were satisfied with their relationship with their immediate supervisor.

“While many employees emphasize compensation/pay when considering how happy they are in their jobs, a significant proportion also place importance on relationships with co-workers and supervisors,” according to Alex Alonso, vice president of research at SHRM.

“Fostering an environment that treats all employees equally and encourages communication among all levels of workers can be an effective way for employers to earn trust from employees and increase their satisfaction with their jobs.”

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Low-Wage Workers: Trapped in a Catch-22?

It’s no secret that employees are hungry for career development. In survey after survey, it almost always ranks near the tops of their lists of sought-after employer offerings. But as just-released research from the Center for Poverty Research at the University of California, Davis suggests, career development can often be elusive, especially if you’re trying to make ends meet in a low-wage job.

88257844Earlier today, the Center posted a policy brief on an ongoing study that finds low-wage workers are very much caught in a Catch-22. Written by UC Davis Professor of Sociology Victoria Smith and Graduate Student Brian Halpin, the brief reports that “low-wage workers know they have to enhance their skills to escape low-wage jobs, but long hours and multiple jobs make skill-building and education nearly impossible.”

Smith elaborates …

The very conditions of low-wage work necessitate that workers hold multiple jobs, and that they have to put in long hours if they can. People find themselves very caught up, just treading water. The fact that they often are supporting other people heightens their need to take extra hours when they can get them.

[The study] found that low-wage work limits opportunities to learn new skills needed for better jobs. To sustain their livelihoods, these workers keep the jobs they have while searching for additional opportunities through relatives, friends and work networks. They patch together multiple full- and part-time jobs to maximize their paid hours.”

Workers told Smith and Halpin that their employers often expect them to be on call and available—even for overtime—without advance notice.

As a result, the researchers found, these workers were left with little time to take advantage of education and training opportunities, which typically require scheduled attendance.

(Smith and Halpin arrived at their findings through in-depth interviews with 25 low-wage workers, all of whom are first-generation immigrants in the Napa/Sonoma area. Interviewees worked in several sectors, including food service, landscaping, domestic work, office cleaning and construction, with some of those interviewed working in multiple sectors.)

No doubt these findings will provide policymakers on the local, state and federal levels more data to chew on as they continue to rigorously debate various minimum-wage initiatives. But there’s little question they also provide employers, especially those employing low-wage workers, reason to pause and reflect on their own workplace policies and practices and whether they’re improving these conditions or standing in the way of progress.

Also worth reflection, of course, is the notion of self-direction and self-responsibility—even in the face of significant hindrances.

As Career Systems International Founder and Chairwoman Beverly Kaye said when I asked her for her thoughts on the study’s findings, many employers would go out of their way to respond were a low-wage worker to express an interest in advancing their careers. “If one of those workers in Napa were to ask if there was a way he or she could go about learning wine making,” she said, “I would think an employer would find a way to help.”

Simply put, Kaye raises a point that probably shouldn’t be overlooked: People need to be “self-empowered” about their own careers.

I guess so long as they have any time at all to do so.

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Looking to Employers for Pay-Gap Solutions

Plenty has been written about the pay gap between men and women in recent months.

188094090Indeed, as most of our readers know, the issue recently made news again when President Obama directed the Department of Labor to issue new rules requiring federal contractors to provide compensation data that includes a breakdown by race and gender.

In light of its ability to get much of anything through Congress these days, the Obama administration has lately been doing whatever it can through executive orders. But as a study released by Glassdoor earlier today suggests, it’s hardly the only interested party with a role to play.

Indeed, when Glassdoor recently surveyed 1,000 employees and job seekers, it found nearly six out of every 10 employees (57 percent) believe employers are in the best position to address pay gaps. This was followed by Congress (30 percent) and President Obama (14 percent).

Asked to specify how employers could make a difference, the respondents said:

  • New company policies around pay and comp (52 percent)
  • Clearer communication from senior leaders/HR about how raises are determined (45 percent)
  • Greater pay transparency (38 percent)
  • Government legislation (21 percent)
  • Employees threatening to leave and/or protests (17 percent)
  • New senior leaders (16 percent)

In many cases, the employees and job seekers indicated they’re looking to HR for clarification, with a fairly healthy portion of the respondents (43 percent) saying they believe the function is responsible for helping them understand how pay raises or cost-of-living increases are determined at their current employer.

Glassdoor’s career and workplace expert, Rusty Rueff, sees the findings as a wake-up call for employers …

Now is the time employers need to take a close look at their salary structure[s] and determine where pay gaps exist, then fix [them] so employees know exactly where they stand in terms of compensation within their organization.  When employees have a clearer understanding of how they’re being compensated without secrecy around salaries, not only can they feel empowered in their current jobs, they’re also often motivated to work toward the next level, which can improve productivity.”

Tied to that notion is the additional stat that more than one in three (36 percent) of the respondents do not believe they understand the process their employer uses to determine pay raises or cost-of-living increases.

As for how men versus women view their pay, more than 42 percent of women do not believe they received fair pay in their current jobs, compared to 34 percent of men. These numbers seem fairly consistent with other studies that have come before.

Glassdoor also asked respondents to check off workplace perks that would keep them satisfied, in those instances when employers might not be in a position to provide pay raises or cost-of-living increases. Here’s what it found they wanted:

  • 61 percent – more paid vacation days
  • 52 percent – more career opportunities
  • 50 percent – flexible work hours
  • 46 percent – option to work from home/remotely
  • 44 percent – company stock/shares
  • 34 percent – healthcare subsidy
  • 23 percent – gym membership
  • 21 percent – opportunities to work on new projects

I’m sure many of you won’t be too surprised to see what some of the top choices were.  I would imagine there are some similarities to what you’re seeing and hearing on your engagement and satisfaction surveys, assuming you’re regularly doing them. But that said, I figure it never hurts to see what the broader universe of employees and job seekers are saying matter most to them these days.

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Obama Tackles Overtime

Tammy McCutchen woke up to a bit of a shock yesterday morning: She learned the revised overtime regulations she helped rewrite in 2003 and 2004, as the Department of Labor’s wage-and-hour administrator under President George W. Bush, were about to be changed significantly by President Barack Obama. Under Bush, overtime regulations were changed so that employees who earn up to $455 per week can be classified as exempt and employers were given greater leeway in determining which employees could be exempt. Obama wants to significantly raise the pay threshold and to modify the “duties” test that employers use to determine exemption.

“This is going to be hugely controversial,” says McCutchen, who’s now a shareholder in Littler Mendelson’s Washington office. “It’s going to keep people like me very, very busy.”

Part of the reason why is the sheer number of employees potentially affected: at least several million fast-food managers, loan officers, computer technicians and others classified as “executive or professional,” according to a White House official who briefed the New York Times. Opponents of the 2004 rule, particularly organized labor, said it gave companies too much leeway to classify employees as exempt so they could avoid paying them overtime.

California recently announced changes to its overtime rules so that by 2016, no employee making less than $800 per week can be classified as exempt from overtime. Should President Obama choose a number close to that, says McCutchen, employers will need to state their case loudly and clearly that such a move will hurt them economically.

“That wage level may make sense in Los Angeles, New York and San Francisco; it does not make sense in Waterloo, Iowa,” says McCutchen. In the rural Midwest and South, setting the exemption level that high will cover a vast number of employees, given the lower wage levels and lower cost of living in those areas, she says.

“When we worked on the revised rule in 2003 and 2004, we looked at Bureau of Labor Statistics data to analyze current salary levels and I hope the DOL does the same level of analysis rather than just picking a number out of thin air that happens to sound good to people who live in large cities,” she says.

Kevin Hyde, chair of Foley & Lardner’s labor and employment practice, says Obama’s move represents part of his effort to raise the minimum wage through indirect ways. He advises HR to carefully look at all the classifications of employees they currently have and determine what their status would be once the new rules are implemented, and budget accordingly.

There’s still some time left: Both McCutchen and Hyde anticipate that the rulemaking process — which will include time for the public (including employers) to comment on the proposal — will take at least 12 to 18 months. They both urge employers to make use of that time by making their voices heard.

“Get involved with your local Chamber of Commerce or send your comments directly to the DOL — talk candidly about the impact this will have on your business,” says Hyde. “Remember, the [National Labor Relations Board] has been trying for years to require employers to display posters on employees’ unionization rights and those rules still aren’t close to being implemented, thanks to the large number of negative comments about them.”

One potentially potent weapon for employers, says McCutchen, is commentary from workers who don’t wish to be non-exempt.

“President Obama may think most employees want to be non-exempt, but there are many employees who consider themselves professionals who have no desire to punch a time-clock,” she says. “There’s a trade-off for everything: If you’re exempt, you don’t get overtime but you also can’t be docked pay for working less than 40 hours a week, so you have more flexibility. There’s always two sides to every story, and the most compelling is testimony from an actual employee.”

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Gap Bets on a Higher Hourly Wage

Everyone’s talking about the recent Congressional Budget Office report that estimated raising the nation’s minimum hourly wage to $10.10 per hour by 2016 could potentially eliminate 500,000 jobs, or about 0.3 percent of total employment. Opponents cite the 500,000 number, while supporters note that the report also estimated the higher wage would increase the incomes of 16.5 million low-wage workers in an average week.

San Francisco-based Gap Inc. isn’t waiting around — yesterday, CEO Glenn K. Murphy announced in a letter to the company’s employees that it would set the minimum hourly rate for its U.S. workforce at $9.00 per hour this year and establish a minimum of $10 per hour next year. “Our decision to invest in front-line employees will directly support our business, and is one we expect to deliver a return many times over.”

Murphy ended his letter with this:

The people in our company who engage directly with our customers carry an incredible responsibility. Our success is a result of their hard work, love of fashion and commitment. We hope this decision provides them with some additional support as they grow their careers with Gap Inc.”

According to a story in today’s New York Times, at Murphy’s previous position — CEO of Canadian pharmacy retailer Shoppers Drug Mart — he discovered that paying the chain’s hourly employees a higher wage than its competitors resulted in greater productivity per worker.

Gap employs 65,000 people in the United States at its Gap, Banana Republic, Old Navy and other stores. The company has not taken a public position on whether the federal minimum wage should be raised.

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The G Quotient: Why Gay Executives Excel

I was intrigued to find a book review in an academic journal about a study that was done all the way back in 2006 on the dearth of gay executives in corporate America. Intrigued on two 454213821 -- Letter Gcounts actually: 1) that I had never heard of this study and 2) that the review was appearing so long after it was conducted and published. Well, it turns out, the answers to both are kind of interrelated.

The very title of the study, and book , by Kirk Snyder, a professor at the Marshall School of Business at the University of Southern California, says a lot — The G Quotient: Why Gay Executives are Excelling as Leaders … and What Every Manager Needs to Know. The findings are also substantive and compelling: As Snyder was studying employee engagement, he noticed that employees of gay executives often had higher levels of job satisfaction than employees of other leaders.

“What he noticed was a connection between some characteristics of gay male executives and what were considered desirable [business leadership] principles, including diversity, creativity and emotional intelligence,” writes Irene F. Stein, an associate core faculty member at the University of the Rockies, in her book review (same title as the book) that appeared in the November 2013 issue of the Journal of Psychological Issues in Organizational Culture.

Snyder then explains the reasons he thinks many gay executives operate naturally under what he has named the “G Quotient” — seven principles of leadership he found he could actually measure using a simple assessment: inclusion, creativity, adaptability, connectivity, communication, intuition and collaboration.

“Much of the connection [between gay business leaders and these seven principles] stems from growing up knowing they are different, and having to adapt to the realities of their environment to feel safe,” Stein writes. “Consequently, gay men develop three fundamental learned skills — adaptability, intuitive communication and creative problem solving — skills that are often demonstrated by gay executives.” Not to mention effective leaders.

So why did Kenneth Sherman, editor-in-chief of JPIOC, assign this fascinating book review to Stein some eight years after Snyder’s study and book publication? Because, as he told me when I called him, too few people have heard about it (myself included). More importantly, at the time it was written, no Fortune 500 CEOs were openly gay and “I still haven’t heard of a single CEO coming out since.”

So does Sherman think corporate America actually needs this infusion? Well, yes, he does. But it goes beyond simply being gay. He says the real message here for employers and HR leaders is that gay business leaders’ effective leadership skills come from the ways in which “they developed their own pathways of adult development and [the fact that] the things they may have encountered at various stages of their lives have predisposed them to certain sensitivities that aren’t really negative things, but positive things.”

If more top business leaders would “simply go around the room” at the next staff or business — or even executive-leadership — meeting and “hear their people’s stories about the challenges of their lives and the things they have rebounded from and now champion,” he says, “the business world would be less rigid,” and all employees would be more engaged and satisfied.

“And guess what,” he says, “companies are going through difficult and strenuous times too.” In other words, he explains, the dialogue could go both ways and workforces would be connected and more productive in ways we can only imagine at this point. “Change,” he says, “comes in small increments.”

I called Stein, too, just to get her take. She says she agrees with Snyder “that the more we can accept everyone’s perspective, including gender identification, the better it will be for business.”

To her, she says, “it’s really the same kind of thing with what women can bring to the workplace … kind of having a more holistic view of employees [and business leaders] and wanting them to bring their whole selves” to work.

I guess considering Stein’s point about women, Sherman’s “small-increments” reference makes sense. Look how long it’s taken us to fully incorporate women into the workplace. And we’re still not there yet, not in terms of pay equity, executive ranks, board representation … or, yes indeed, female CEOs.


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HR Plaintiffs Build Their Case Against Lowe’s

Worker misclassification is back in the news again, this time with Lowe’s Home Centers the center of attention.

Lowes_Sanford_Opening1-330x500Earlier this month, U.S. District Judge Virginia M. Hernandez Covington conditionally certified as a nationwide class a lawsuit brought by former Lowe’s employees, stating that the suit sufficiently showed that Lowe’s misclassified Lizeth Lytle and similarly situated workers and failed to pay them “the FLSA-mandated time-and-a-half hourly rate for any hours worked beyond 40 in a week, even though the workers lacked discretionary authority over hiring, firing and supervising other employees.”

In the complaint, the plaintiff asserted that Lowe’s …

… willfully and intentionally engaged in a nationwide pattern and practice of violating the provisions of the [Fair Labor Standards Act (FLSA)], by misclassifying Human Resources Managers as exempt under the FLSA overtime wage provision, thereby improperly failing and/or refusing to pay [Lytle] and the Plaintiff Class, comprised of all current and former similarly situated employees who work or have worked over forty (40) hours per week, overtime compensation pursuant to FLSA [29 U.S.C. §§ 206-207].

Of course, cases involving the misclassification of workers aren’t uncommon. But what’s particularly interesting about this suit—which was initially filed in August 2012—is that it involves at least 1,750 HR managers who claim “they weren’t actually managers and were willfully misclassified as exempt from overtime pay requirements.”

I recently spoke with Thomas Lewis, an attorney with Stevens & Lee in Princeton, N.J., about the significance of this case. As might be expected, he immediately pointed to challenges that could easily arise in a case involving HR professionals as the plaintiffs.

“What makes this particularly interesting isn’t just that there’s potentially a Fair Labor Standards Act violation here, but that it’s always difficult when the plaintiff is an HR professional,” Lewis said. “You have to be very careful when the plaintiffs are in HR, because they know all of the hidden secrets of the company and can therefore be ferocious plaintiffs.”

We’ll obviously have to wait and see how this case plays out. But some experts believe it also serves as an important reminder that HR departments aren’t immune from overtime lawsuits.

In a blog post, David L. Barron, an attorney in Cozen O’Connor’s Houston office, writes …

Many exempt HR personnel do not qualify for the executive exemption because they do not directly supervise two or more full-time employees. The administrative exemption, which likely would apply to HR staff, can pose challenges in ligation because it revolves around the level of discretion enjoyed by the employee (which can be subjective). Prudent employers should make sure to keep records of exempt HR employees being involved in hiring, firing or discipline of employees. Keep in mind that the law does not require the exempt employee to have final authority to make decisions, only that he or she be allowed to make recommendations which are given substantial weight. Keeping such records will make it very difficult for the exempt employee to sue for mis-classification and overtime.”

Certainly that’s sound advice in any setting, but especially for those cases involving HR as the plaintiff.

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Shareholders Say ‘No’ to Oracle CEO’s Payday

EllisonOracle Corp. wants to pay its founder and CEO Larry Ellison a pay package worth $78.4 million, but its shareholders have just voted “no” by an overwhelming margin. In fact, it appears that 80 percent voted against the package, if you strip out the 25 percent of company shares owned by Ellison, writes exec-comp observer Steven M. Davidoff, a professor at Ohio State’s Moritz College of Law.

That’s not to say Ellison won’t end up getting the enormous package anyway — after all, the Dodd-Frank provision granting shareholders a say-on-pay vote on executive compensation is nonbinding. But the Oracle vote is striking nonetheless, Davidoff writes, because in most cases shareholders nearly always vote to approve CEO pay packages. In fact, as of August 99 percent of Fortune 500 companies had their pay packages approved by shareholders, according to Towers Watson.

In Oracle’s case, shareholders were encouraged to vote no by Change to Win, a union-affiliated organization that seeks to draw attention to what it says is outrageously exorbitant CEO pay that is not sufficiently tied to company performance. Ellison’s pay far exceeded that for executives at peer companies such as Google and Microsoft, Change to Win noted. Ellison’s compensation was not based on incentives that require Oracle to outperform its competitors, Davidoff writes. Instead, it is linked to Oracle’s stock price — unlike at other companies, which grant incentives in the form of restricted stock to ensure pay is less affected by gyrations in the stock market that may have nothing to do with a company’s actual performance, he writes.

Say-on-pay has tripped up other companies. One of our recent HR Honor Roll winners, Paul McKinnon, had to deal with a negative vote from Citigroup shareholders last year on the pay package for former CEO Vikram Pandit. McKinnon helped lead an outreach to shareholders, who this year granted a 91-percent favorable vote for Citi’s exec-comp package. Although say-on-pay votes aren’t binding here in the States, that’s not the case in some European countries. And, experts warn, it may take only a few more examples of egregious CEO misconduct or another economic downturn to make it binding here, as well.

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