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Potential Effects of Salary Disclosure in the Workplace

24 Jun

How much each worker makes has traditionally been between that employee and HR. Many HR departments have had a tight hold on their payroll management and have worked to keep discussions about salary out of the workplace. In fact, numerous employers have it set in their employee handbooks that such talk about what workers make is against the companies' rules.

However, a 2012 article that appeared on TLNT noted that any rules that restrict employees' freedom to discuss their compensation is against the National Labor Relations Act. If this isn't enough, President Barack Obama recently issued an executive order stating that employers are not allowed to retaliate when workers talk about their salaries amongst themselves. According to the order, prohibitions against speaking about compensation can allow salary discrimination in the workplace to go unchecked, because if employees aren't able to talk to one another about how much they made, it is much harder for discrimination to be discovered.

Some HR professionals may not think such discrimination happens in today's workplace, but it does. Consider this example from MoneyWatch: A new supervisor of a travel company accidently sent a spreadsheet to a 11-person department that outlined what each worker made. Even though the employees did the same work, there was a $20,000 annual discrepancy between the highest and lowest paid workers. These employees might not have known there was such a difference in compensation despite everyone doing the same job if it wasn't for this mistake.

Avoid the Fall-Out of Not Allowing Salary Disclosure
Wage transparency is becoming commonplace, and HR professionals need to understand that not allowing workers to discuss their wages can lead to negative consequences. For one, prohibiting salary disclosure has been determined by the federal government to be illegal. Employers could find themselves in violation of employment legislation by not following President Obama's order.

In addition, while an article in TLNT noted fairness can be subjective, workers who do the same work should be paid equally, and employees who aren't can become mad to the point of quitting and can even bring discrimination lawsuits against the employer. For instance, the MoneyWatch article noted the employee who wrote into the publication said the morale of his or her team has dropped considerably since they discovered the pay discrepancies, and the worker in particular was angry that he or she was a top producer but wasn't compensated for that level of performance. 

Raising the Minimum Wage Means Increased Need for Payroll Management

10 Jun

States and cities across the country have already started increasing their minimum wages, causing many employers to rethink their payroll management software and strategies. The Associated Press reported at the end of May that Michigan Gov. Rick Snyder recently signed a bill granting a rise in the state's minimum wage to $9.25 an hour over the next four years, which will be a 25 percent boost from the state's current wage of $7.40 per hour. According to the Los Angeles Times, Seattle's city council unanimously voted to increase the city's wage to $15 an hour, making Seattle the city with the highest minimum wage in the U.S. These are just the standouts in the minimum battle currently waging at the state level. According to the Society for Human Resource Management, more than a dozen states boosted their minimum wages this past year, with most having gone into effect this past Jan. 1.

Minimum wage remains a federal issue as well. The Washington Post reported that Congress continues to be split on whether to raise the federal minimum wage to over $10 per hour, a considerable increase from its current $7.25 an hour. The Los Angeles Times noted that Congress's efforts to increase the minimum wage have been stagnated by the lobbying of opponents. However, with so many states and municipalities taking on the issue and raising their own minimum wages, the federal government may end up doing the same soon. The AP reported President Barack Obama and many lawmakers support increasing the minimum wage, and labor unions continue rallying across the country for the hike.

Payroll Management Key With Higher Minimum Wages
What does this mean for employers? McDonald's CEO Don Thompson has already come out saying that the company supports a minimum wage boost, according to the Chicago Tribune. Thompson said that even though McDonald's would have to double its current base pay to meet a minimum wage hike to $15 an hour, the company "will be fine."

"We'll manage through whatever the additional cost implications are," Thompson said on May 12, according to the Tribune.

Yet not many employers are as large as McDonald's and may not be able to afford doubling their base salaries. A recent Congressional Budget Office report looked at how raising the minimum wage at two different rates – to $10.10 or $9.00 – would impact employment. According to the report, the $10.10 option would have a bigger impact on employment than the $9.00 option, with approximately 500,000 workers losing their jobs by the second part of 2016. This loss is a 0.3 percent drop in employment. Yet the report noted as many as 1 million employees may lose their positions because of a $10.10 hike.

Employers and HR professionals will need to use the right payroll management software if there is a rise in the minimum wage. Employers may have to adjust their payrolls to comply with their state's or the federal government's minimum wage. 

IRS May Penalize Employers That Move Workers to Health Insurance Exchanges

29 May

As healthcare costs increase and provisions of the Affordable Care Act (ACA) are rolled out, many employers are looking to ask employees to find health insurance on the federal or state health insurance marketplaces – a benefits and payroll management strategy that can save employers money. Some choose to offset the move by providing workers with funds to help workers pay for their premiums and various healthcare costs, but The New York Times recently reported the Internal Revenue Service (IRS) has ruled against the approach.

A tweak of Notice 2013-54 bars employers from dumping their workers onto the exchanges just to save the company in healthcare costs. According to the IRS, employer payment plans, or arrangements where employers don't provide health insurance to their workers but instead reimburses employees for their healthcare costs, are subject to healthcare market reforms. The IRS said it will penalize employers if these plans don't comply with market reforms, and the fine is a $100 per day per applicable employee excise tax. This adds up to $36,500 annual for each worker.

Christopher Condeluci, a former counsel to the Senate Finance Committee, told The New York Times employers should instead provide workers with higher pay, which is taxable, if the company wants to move employees to the exchanges.