HRIS & Payroll Excellence - August 2023

Top Picks 15

A Salary By Any Other Name Must Still Be A Salary

Paying salaries to exempt and non-exempt employees

- Linda Bond Edwards, Partner, RumbergerKirk

22

Why Does Gender Pay Gap Still Persist?

How employers can address the issue

- Jesse Meschuk, Senior Advisor, Exequity

Building Equitable Pay Ranges In The Age Of Transparency

Fairness, compliance, and talent attraction through pay transparency

- Kyle

Holm,

VP of Total Rewards Advisory, Sequoia

29 32

“On-Call” Time Compensation: Practical Approaches To A (Possibly Costly) Dilemma

Understanding compensability under FLSA and New Jersey law for on-call time

- Mark Tabakman, Partner, Labor and Employment Department, Fox Rothschild LLP

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Navigating the payroll intricacies of small businesses

Smallbusinesses are often laden with unique challenges. One of the most intricate aspects is payroll management. It can be a daunting task. You have to determine how to pay employment taxes, ensure your employees get paid in a timely manner, calculate accurately to maintain compliance with ever-changing regulations, and more.

Such businesses can avail of some services that make the process of handling payroll easier. There are two main choices when it comes to payroll services. Professional Employer Organizations, or PEOs, and traditional payroll service providers.

However, choosing between the two a finding the right partner is not an easy task.

Brett Farmiloe from Featured, in his article, titled 7 Factors That Influence HR To Choose Between PEO And Payroll Providers, shares the compilation of seven insightful responses from human resources experts to guide your decision-making process.

Paying international talent is complicated. It is fraught with risks of non-compliance and lengthy processes. However, what is global payroll, and what makes it so complex? In an exclusive interview, Kira Rubiano, VP of Global Payroll Operations, Atlas, explains the need for agility, adaptability and a global mindset in the complex world of payroll.

Whether an employee is exempt or non-exempt is a question that every employer should answer when determining whether to pay hourly or provide a salary. A good rule of thumb is that hourly employees are typically paid to complete a task, while salaried employees are paid to complete a mission.

It is not, however, as simple as it sounds.

Read A Salary By Any Other Name Must Still Be A Salary by Linda Bond Edwards from RumbergerKirk to understand the distinction between paying salaries to exempt and non-exempt employees. Also, read Why Does Gender Pay Gap Still Persist? by Jesse Meschuk from Exequity to learn how employers can address the issue.

That is not all. Also, check out the other articles featured in this month’s issue. We hope this edition of HRIS & Payroll Excellence will help you achieve excellence in your core HR and payroll processes.

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COVER ARTICLE

7 Factors That Influence HR To Choose Between PEO And Payroll Providers

Finding your all-in-one solution

By Brett Farmiloe, Featured

Inthe quest to understand the decision-making process between a PEO and a traditional payroll provider, we reached out to top executives and HR professionals. From having better health benefits for employees to finding an all-in-one solution, we have compiled seven insightful responses to guide your decision-making process.

● Better Health Benefits for Employees

● Cost-Effective Options Won Us Over

● Extensive HR Services Assures Compliance

● Managing Multi-Jurisdictional Compliance

● Scalability Tipped the Balance Toward PEO

● Payroll Automation Led to Traditional Provider

● All-in-one Solution Sealed PEO Choice

Extensive HR Services Assures Compliance

The choice between a professional employer organization (PEO) and a traditional payroll provider depends on several factors, such as the organization’s specific requirements and priorities. The required level of HR support and expertise was a major factor that influenced our decision.

Murat Yashar, Director, House of Worktops

In our case, we chose a PEO because of the extensive HR services they provided besides payroll processing. Typically, PEOs provide a variety of HR services, including benefits administration, employee onboarding, help with compliance, and HR consulting.

Our company needed to outsource payroll and HR to streamline operations and maintain compliance, so this was helpful. We could free up internal resources and focus on strategic objectives by working with a PEO to access a team of HR professionals who could advise and support us on HR problems.

The PEO’s knowledge of complex employment laws, employee benefits, and HR administration relieved our HR personnel and assured compliance.

Better Health Benefits for Employees

As our company has continued to grow, the owners and I have had a difficult time deciding whether to stick with our current payroll provider or switch to a PEO. However, after exhaustive research and dozens of introductory phone calls with various firms, we finally went with a PEO.

The primary decision factor for us boiled down to health benefits. The PEO we selected can provide our employees with better healthcare benefits at a lower cost compared to what we previously offered. Ultimately, we think this will help us attract and keep talent in the long run.

Cost-Effective Options Won Us Over

The decision to choose between a Professional Employer Organization (PEO) and a traditional payroll provider can be complicated. It is important to consider several factors before making your final choice. One of the primary factors that influenced our decision was cost.

We compared the costs associated with each type of provider in order to identify which option was the most cost-effective for our organization. After researching, we found a PEO provided more comprehensive services than a traditional payroll provider at a more affordable rate. This made the decision to choose a PEO an easy one.

Managing Multi-Jurisdictional Compliance

We chose a PEO over a traditional payroll provider because our business operates in multiple states. The PEO’s strength in handling multi-jurisdictional compliance convinced us.

Dealing with different state laws and regulations can be tough, but a PEO has the expertise and infrastructure to manage it all. This way, we don’t have to worry about keeping up with each state’s rules, taxes, and employment requirements.

Janelle Owens, HR Director, QuickHR

Martin Seeley, CEO, Mattress Next Day

Normand Chevrette, President and CEO, CME Corp.

Scalability Tipped the Balance Toward PEO

In the infancy of our solar installation venture, the choice between a professional employer organization (PEO) and a conventional payroll provider was one we grappled with immensely. With our aspiration to grow rapidly, scalability tipped the balance in favor of a PEO.

I recall a particular instance that reinforced this decision. Our business experienced an unexpected surge in orders during a local renewable-energy campaign. Suddenly, we needed almost to double our workforce.

Had we opted for a traditional payroll system, the administrative burden of such an expansion would have been daunting. But, with the PEO’s infrastructure already in place, we absorbed this growth with ease. This experience solidified the conviction that our choice of a PEO, with its inherent scalability, was indeed the right one.

Haya Subhan, General Manager, Solar Panel Installation

Payroll Automation Led to Traditional Provider

We went with a traditional payroll provider because we didn’t need all the additional services a PEO can provide. Instead, we have an in-house HR team that handles all the basic employee management functions; we just wanted to find a solution that would automate the payroll process so that HR didn’t have to spend so much time managing it.

All-in-one Solution Sealed PEO Choice

We were also looking for an HR technology solution and payroll, and the PEO offered all of that and more. It serves us as a nearly all-in-one solution for our employee management, including benefits and compliance management, besides payroll.

What we liked about the PEO was that it handled everything rather than us having to find separate solutions and then manage each one individually.

The PEO saves us time and gives us the peace of mind that everything related to people management is being handled by professionals.

Brett Farmiloe is the Founder and CEO – and currently CHRO - of Featured. Brett is a strategic human resource management (SHRM) Influencer and has also been a keynote speaker at several state SHRM conferences around the topic of employee engagement.

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Corey Donovan, President, Alta Technologies

Nihan Çolak Erol, COO, Wingie

Paying international talent is complicated. It is fraught with risks of non-compliance and lengthy processes. However, what is global payroll, and what makes it so complex?

In an exclusive interview with HR.com, Kira Rubiano, VP of Global Payroll Operations, Atlas, explains the need for agility, adaptability and a global mindset in the complex world of payroll.

Global Payroll Compliance: Challenges And Solutions

Excerpts from the interview:

Q:Whatis global payroll, and how does it differ from local payroll?

Kira: Global payroll is an art, not a science. So, payroll professionals need to be agile, adapt and work cooperatively with stakeholders to address and resolve issues that will likely arise daily in different parts of the world.

The process is cyclical and predictable, but local variables exist. Every country has its regulations, requirements, reporting standards, infrastructures and practices. Consequently, it is common to encounter new processing events and in-country situations that disrupt services. I have seen and experienced everything from a coup to natural disasters to the loss of electricity countrywide.

In global payroll, you need to be prepared to adapt when such challenges occur. And that means recognizing that what works in one country may not work in another. It is essential to work cooperatively with all stakeholders to ensure you have the necessary information to make appropriate decisions and bring forward the best solutions.

Exclusive interview with Kira Rubiano, VP of Global Payroll Operations, Atlas

Additionally, global payroll professionals must educate themselves on the cultures they are working with and understand local payroll regulations. You may not always be able to relate to each culture, but recognizing these differences will go a long way in ensuring collaboration and optimizing the payroll process.

Lastly, good communication skills are critical. I cannot stress enough the importance of communicating with all stakeholders regularly.

Q:What are the major challenges of paying a global workforce?

Kira: Compliance is paramount. Companies must do their due diligence before moving into a new market and hiring employees. I have seen organizations hire employees prior to doing their due diligence on entity formation type and completing required registrations before hiring can commence and payment can proceed.

If registrations are not complete, this creates a problematic situation for the employee, who was expecting to begin work at a specific date. And it creates a significant liability and risk for the organization.

First and foremost, the organization needs to know what activities it wants the employees to carry out and understand their options for hiring locally.

Compliance extends beyond company and employee registration. It touches all aspects of managing a global workforce, from gross to net calculations, tax filings and pay slip delivery to payment delivery. Every element from start to finish is ridden with compliance requirements that must be upheld at a global level.

Working with a trusted partner and advisor is crucial to help navigate the global intricacies. Atlas helps companies navigate such challenges by providing a compliant way to onboard, hire and pay employees around the world, all of which is complemented by localized expertise.

Q:Why is payroll a crucial function of an organization?

Kira: Payroll is an absolutely critical function not only in an organization but for the global economy. If all payroll professionals ceased to operate tomorrow, economies would stall as there would be no way to get money into the hands of the worker.

Q:What aspect of this profession do you enjoy the most?

Kira: Since 14, I knew that I wanted to work globally and cross-culturally. It has always been and continues to be a passion of mine. I proudly dub myself a “global geek.”

After graduating from university with an International Relations degree and International Law minor, I intended to pursue a career at the United Nations. However, by sheer fate, I came upon a global payroll company, and my background fit perfectly. I spent most of my professional career growing in the industry as a global payroll professional. Having had many roles, I have learned a great deal about the different aspects of the business and the various global nuances and processes.

I then spent some time in management working for a large accounting firm’s international division, which gave me great exposure to the global side of accounting and tax compliance. I continue to lead global teams managing global payroll processing for thousands of employees worldwide.

I am incredibly passionate about working globally and cross-culturally. A career in global payroll allows me to fulfill my passion and keep learning about the incredible world we live in. I am grateful to be surrounded by an amazing team of payroll professionals, who share my passion and commitment to ensuring our global employees are paid accurately, timely and compliantly.

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A Salary By Any Other Name Must Still Be A Salary

Paying salaries to exempt and non-exempt employees

By Linda Bond Edwards, RumbergerKirk

Whetheran employee is exempt or non-exempt is a question that every employer should answer when determining whether to pay hourly or provide a salary. A good rule of thumb is that hourly employees are typically paid to complete a task, while salaried employees are paid to complete a mission.

So, what is a salary? A salary paid to an employee is a fixed amount of money paid for a set period

of time, usually weekly, biweekly or monthly, that does not change based on the quality and quantity of work performed. A more precise definition of “salaried” is provided in Section 13(a) (1) of the Fair Labor Standards Act (FLSA) according to the Regulations, 29 C.F.R. Part 541: “Being paid on a ‘salary basis’ means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis.

The predetermined amount cannot be reduced because of variations in the quality or quantity of an employee’s work. Subject to some limited exceptions, an exempt employee must receive the full salary for any week during which the employee performs any work, regardless of the number of days or hours worked. Exempt employees do not need to be paid for any workweek in which they perform no work.

If the employer makes deductions from an employee’s predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a ‘salary basis.’ If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.”

This definition is for employees who meet the qualifications for an exemption from overtime requirements. Exempt employees must also be paid the minimum weekly salary of $684 as required under Department of Labor regulations.

Employers who make deductions from exempt employee pay for partial-day absences, being tardy or requiring employees to clock in and out as punishment, for example, may find themselves defendants in a lawsuit for violating FLSA requirements. Employers do not violate the FLSA by requiring exempt employees to clock in and out or otherwise provide proof of hours worked. Discipline issues that may be attributable to attendance should be dealt with as a performance issue.

Employers can, however, satisfy the salary requirement by making deductions from an employee’s paid leave balance to make up for partial-day absences. As long as the exempt employee receives at least their weekly minimum pay, regardless of whether the sum includes regular pay or a combination of salary and paid leave, the employer meets the salary requirement. Employers can also suspend exempt employees without pay for designated inappropriate conduct so long as the guidelines are clearly established. Employers should be sure to communicate these policies to employees.

Paying a Salary to a Non-Exempt Employee

The FLSA allows employers to pay a salary to non-exempt employees under certain circumstances. The definition of a salary is roughly the same except that when a non-exempt employee, better known as an employee, entitled to overtime, is paid a salary, the employer has certain record-keeping and payment requirements:

● The employer must be clear about the number of hours the employee is expected to work each week for the salary being paid.

● The salary being paid must ensure that the employee is paid the state or federal hourly minimum wage.

● The employer must require the non-exempt employee to keep accurate time keeping records because the employee must be paid overtime for all hours worked over 40 in a workweek.

● If the salary the non-exempt employee receives is expected to be the straight time pay for all hours worked during the workweek, the employer should be very clear about that. For example, if the non-exempt employee is scheduled to work 38 hours in a workweek, the employer should tell the employee that there is no additional pay if the employee is required to work two additional hours in that workweek, bringing the total to 40 hours.

● If a salaried non-exempt employee works 45 hours in a workweek and receives a salary that pays straight time for all of the hours worked, the employee is only entitled to half-time pay for the five hours of overtime.

Paying a salary for a non-exempt employee typically works best when the non-exempt employee rarely works overtime, or the overtime is predictable.

A Few More Words About Record Keeping

Once a non-exempt employee has worked 40 hours in a week, the employer can flex days off within the work week to avoid paying overtime. However, if an exempt employee has worked 40 hours and it’s only

Wednesday, the employer can expect the exempt employee to continue working for the rest of the week. In the private sector, there is no such thing as compensatory time (comp time), so the employer must pay the non-exempt employee overtime as it’s earned. In the public sector, comp time is available. This means that instead of paying the employee for time and a half for all hours worked over 40 at the time the employee works the hours, the employer can accrue the overtime worked at time and a half and allow the employee to take time off at another point.

Whether paying employees a salary or an hourly wage, the employer should remember the differences and requirements of each and fully understand the important role of record keeping. Being mindful of the risks and benefits of paying a salary will help employers avoid visits, letters and phone calls from the Department of Labor and plaintiff lawyers.

Bond Edwards, a Partner at RumbergerKirk in Tallahassee, Florida, devotes her practice to the representation of employers in the private and public sectors in matters involving employment and labor issues. As a former corporate director of human resources, she brings to her legal practice the pragmatic and real-world experiences arising from the employer-employee relationship.

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Linda

The Cost Of (Pay) Discrimination In Corporate America

Lessons from Goldman Sachs

By Jeffrey Hayzlett, C-Suite Network

Here’s an eye-popping stat – a 20-year-old woman with a full-time job stands to lose over $407,000 over a 40-year career compared to her male counterparts.

The bottom line here is – as much as we try, pay equity might not be reached within MY lifetime. According to PwC’s Women in Work Index 2023, it would take more than a century to close the gender pay gap. That’s abysmal and it shouldn’t be happening in today’s business landscape. Sadly, it is.

Discrimination is a costly business. Just ask financial giant Goldman Sachs. Earlier this year it was announced that the company will pay $215 million to settle a class action suit claiming the bank discriminated against women in areas like pay, performance evaluations and promotions.

Pay equity remains a huge issue in corporate America. Women earned an average of 17 percent less than men in 2022 and still earn 82 cents for every dollar a man makes. The numbers are even more jarring when it comes to women of color –Black and Hispanic rural women make just 56 cents for every dollar made by white, non-Hispanic males.

Wall Street has had a reputation for being toxic in so many ways – from culture to discriminatory practices, to pay and gender inequity. Back in 1998, Smith Barney paid $150 million to settle a lawsuit claiming it tolerated a hostile work environment that included pay discrepancies and derogatory language towards women.

Goldman Sachs (and other Wall Street firms) has the funds to settle this lawsuit put forth by about 2,800 female associates and vice presidents in several divisions within the company. However, not everyone has the funds to settle and stay in business. There are plenty of lessons to learn from this scenario: if your people are your best asset, pay them! You must put actions behind your words; otherwise, you’re full of empty promises and it puts you at risk of losing valuable employees – which are your competitive advantage.

Sometimes in the haste to move the business forward, corporations forget to look within to see what needs to change and how they can be part of that change. Obviously, a giant like Goldman Sachs has a lot more to look at within the day-to-day operations, but they still missed the boat. The lesson here is never turning a blind eye to the great work output by your employees and to be more proactive when it comes to pay equity.

What Can We Do to Become more Aware, and Help Be the Change?

First and foremost, we must establish transparent and standardized pay scales based solely on job responsibilities, skills, and experience, not gender or other demographics. This ensures that employees are compensated fairly for their contributions.

Another way to achieve pay equity is by promoting diversity and inclusion in leadership positions. Representation matters and when diverse voices are given a seat at the table, decisions are made with a broader perspective, leading to fairer compensation practices. It’s essential to establish diversity goals that foster an inclusive work environment and provide equal opportunities for career advancement.

Promoting pay transparency is a powerful tool in the fight against pay inequity. Encouraging open discussion about compensation, providing salary ranges for job postings, and conducting regular pay reviews can help identify (or rectify) any disparities that may exist. This serves a dual purpose: empowering employees to negotiate fair salaries while holding organizations accountable for pay equity.

Education also plays a role. Businesses must provide training programs and resources to employees and managers, promote an understanding of pay equity and its importance. This raises awareness and fosters a culture of equality, where everyone feels valued and is rewarded equitably for their hard work.

The state of pay equity is a call to action for leaders and organizations across all industries. It’s time to move beyond rhetoric and embrace tangible steps to ensure fairness and balance our compensation

practices. Closing the pay gap helps us all by driving innovation, collaboration, and business success.

Pay equity isn’t just a moral imperative organizations must address; it’s a strategic necessity. From Main Street to Wall Street, let us seize the opportunity to create a future where pay equity isn’t the exception, but the rule.

Hopefully, this lawsuit will set Goldman Sachs on the right path where no employee feels devalued (and demoralized) by the lack of compensation and advancement opportunities.

Doing the right thing shouldn’t cost millions of dollars.

Jeffrey Hayzlett is a primetime television host of C-Suite wit h Jeffrey Hayzlett and Executi ve Perspectives on C-Suite TV , and business podcast host of All Business with Jeffrey Hayzlett on CSuite Radio . He is a global business celebrity, speaker, best-selling author, and Chairman and CEO of C-Suite Network , home of the world’s most trusted network of C-Suite leaders. Hayzlett is a well-traveled public speaker, former Fortune 100 CMO, and author of four best-selling business books: Think Big, Act Bigger: The Rewards of Being Relentless ,  Running the Gauntlet ,  The Mirror Test and The Hero Factor: How Great Leaders Transform Organizations and Create Winning Cultures.

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Why Does Gender Pay Gap Still Persist?

How employers can address the issue

By Jesse Meschuk, Exequity

ArecentPew Research analysis revealed the pay differential between men and women is essentially unchanged over the last 20 years. Comparing the median hourly earnings of men and women in full- and part-time jobs, women earned an average of 82 percent of what men earned in 2022, compared to 80 percent in 2002.

The statistic is shocking considering the collective efforts to close gender pay gaps in the United States: raising awareness, formalizing salary ranges, instituting gender-blind hiring practices, publishing pay equity reports, and formalizing legislation in a number of states. Why are the effects of these

efforts so small, and what can we do about it?

To attempt an answer, we first need to deconstruct this phenomenon a bit and dig into what is driving the differences. Through that, we can see that the solution to pay equity requires a much more holistic and nuanced approach.

Women Are Overrepresented in Lowerpaying Occupations, Especially Out of Undergraduate Programs

Women have earned more college degrees than men since 2014, which would in theory be helping close the gap in wages. However, this has not materialized. Why aren’t those degrees translating to better pay?

The answer might lie in what women and men are studying in college, and how their degrees are compensated after graduation. In the 2020-21 academic year, for example, there were 95,000 Bachelor’s degrees in engineering awarded to men, compared to 30,000 to women. Their average starting salary out of college is higher than $100,000. Similarly, 81,921 Bachelor’s degrees were awarded to men in computer and

information sciences compared to 22,953 to women.

Conversely, 74,013 Bachelor’s degrees were awarded to women in Education ― the lowest-paying field of study, research shows ― compared to 15,385 to for men. Another 227,272 Bachelor’s degrees in health professions and related programs are awarded to women in the U.S. (starting salaries around $45,000), compared to 39,382 degrees in the same field awarded to men. The growth in women graduating from college isn’t enough to overcome their underrepresentation in higher-paying professions.

Taking Time Off for Family Has Impacted Career and Wage Progression

According to the Department of Labor, unpaid family caregiving reduces a mother’s lifetime

earnings by 15 percent, which also creates a reduction in retirement income. This suggests a measurable effect of women being unfairly punished for taking time to have children. This phenomenon alone could account for the majority of the gender pay gap in like-for-like positions.

We can indirectly observe this effect play out in pay equity data based on age. The Pew study notes that from 25 to 34, women earned an average of 92 cents for every dollar earned by a man in the same age group, an 8-cent gap, in 2022. That same year, the gender pay gap among workers of all ages was 18 cents. In other words, in the years immediately after men and women often graduate from college, the gender pay gap is smaller than during their mid-to-late-30s, when many couples are raising children.

Since wages tend to increase over a worker’s lifetime, the income women lose when leaving the workforce after age 34 is likely more significant than the income they would lose earlier in life, compounding the problem every year thereafter, leading to even more dramatic inequity in retirement.

Inequity Persists in Hiring Process

Some of the problems outlined above could be addressed when hiring women in mid-career. For example, if a man and a woman were being recruited for the same Finance Manager role, and the targeted salary for that role was $120,000, hiring the woman might correct a gap created earlier in her career caused by differences in education level or the time she took away from work to have children.

This example is atypical of reality. Companies often decide their starting offer by providing a percentage increase from the applicant’s prior role (e.g., a 10-15 percent raise compared to the previous job). This only serves to reinforce the gender pay gap and allow the problem to persist, and multiply over time from a dollar perspective as salaries grow.

While a few states have passed laws preventing companies from asking for an applicant’s current salary, many have not. Even in states where those laws exist, candidates who provide that information voluntarily anchor their salary targets in their own history of compensation, rather than the market rate for their job. Many don’t even know the market rate when negotiating pay.

Companies are of course incentivized to maximize

profits by keeping costs as low as possible to deliver the required revenues and growth. If employers can keep wage growth low without sacrificing productivity, turnover, etc., this problem is likely to persist.

Implicit Bias still Plays a Role

If the pay gap could be reduced to a simple math problem, perhaps the solutions would be more straightforward. But evidence exists that implicit bias persists.

When asked about the factors that play a role in the gender pay gap, half of U.S. adults point to women being treated differently by employers as a major reason, according to a 2022 Pew Research Center survey Studies around hiring processes showed that when two resumes were reviewed by an employer, and the only difference was the applicant’s name (one a man’s name and the other a woman’s), the man was perceived to be more qualified or more closely meet the qualifications than the woman.

Real-world examples reveal the same issue: one study showed if identical products were sold on eBay, female sellers received offers 19 percent lower than male sellers. Even when controlling for all other factors (time of sale, seller reputation, etc.), the gap persisted. This suggests implicit bias could be playing out in the workplace unknowingly, at the expense of women’s income.

Solutions

The key to solving the gap is understanding the core root of the issues. Looking at the causes above helps identify potential solutions, such as:

● Encourage and sponsor women to enter higher-paying fields out of college, or train them early in career: Without early intervention, if higher-paying early-career roles are disproportionately male, an initial gap will form that will be more difficult to overcome as compensation compounds over time. More effort should be made to get women into engineering, computer science, AI, robotics, sciences, and other STEM fields to help close that gap. Additionally, companies could take a more proactive role as well by offering more training programs for early career women in these fields (i.e., computer programming) to help move more women into the field within their organizations.

● Implement a more objective, range-based hiring practice: Rather than using an applicant’s prior role to determine her salary, establish a baseline or minimum level for each role based on the organization’s compensation philosophy. This can help reduce pay gaps that form at the point of hire. It won’t necessarily

close the gender gap entirely ― some individuals will always be paid more than the minimum ― but it will allow companies to proactively narrow the gap for women via pay equity audits and other practices.

● More widespread legislation to prevent harmful practices or proactively correct them: If more states passed laws preventing companies from asking for salary information, and more states passed pay equity laws requiring the right analysis of pay gaps and corrective plans of action, it would help close gaps more quickly and drive the right action planning on a regular basis.

● More diligent efforts to remove bias: removing names from resume screens, ensuring more balanced representation in interview panels between men and women, looking at promotion rates, training utilization, etc. could help correct unintended unconscious bias.

● Policy changes for family leave: Women who take time off for family leave should not have prorated merit or salary increases. Efforts should be taken to evaluate the career path for women returning to work, and ensure the right opportunities are provided to balance out inequities in advancement. With the

right proactive approach, companies can close unintended gaps created by their policies and practices.

The gender pay gap is a solvable problem. It requires a collective effort among local communities, schools and universities, state and federal governments, and companies to help close the gap. By truly understanding where the problem is created, we can devise pragmatic solutions that move median salaries closer to equality.

Jesse Meschuk is Senior Advisor with Exequity. Jesse is a career and human resources expert specializing in compensation. Hhe has more than 20 years of consulting and human resources experience and has worked across a wide variety of industries including technology, entertainment, gaming, retail, hospitality, and sports. Jesse’s work has spanned across the Americas, Europe and Asia and he has considerable expertise on how to successfully manage a diverse, global culture.

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Telling Your Employees How To Travel To Work?

A cautionary tale for knowing your state and local requirements

By Brian J. Markovitz, Joseph, Greenwald & Laake, P.A.

Are you an employer whose employees perform work somewhere else besides your office? For example, do they work at a construction worksite or at a different office park where your company does not have an office? Or maybe your company’s office park has limited options for parking at the office? You might think it is a good idea to tell your employees that they cannot drive to the worksite directly or that they cannot be dropped off at the worksite or office park.

You even might further instruct them that they have to arrive at the worksite after they go somewhere to catch a ride by employer-provided transportation or that they have to take a shuttle bus from another location and ride it to your office park because you do not have parking there. You possibly do so believing that they are not “on-the-clock” for their time traveling. You do so, as the cliché says, “at your own peril.”

Before issuing a travel time policy, employers should know

their state and local legal and regulatory requirements. Depending on where the travel time is taking place, that time could very well be compensable work, especially if the employer takes any part in deciding how it occurs. Moreover, if your employees work full time, you could owe employees overtime, which means monetary amounts at time and a half or even higher rates of compensation depending on the legal requirements in your jurisdiction.

To understand how this could be, go back to 1938, when the Fair Labor Standards Act (“FLSA”) was enacted by Congress. The FLSA originally required employers to compensate their employees whenever it was necessary for employees to report somewhere, including both on and off work premises and “for some time prior and subsequent to the scheduled working hours.” See Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 690 (1946). The Anderson decision and two other decisions by the United States Supreme Court around that time held that

if the boss told an employee to be somewhere, the employee was on duty and needed to be paid for that time.

In 1947, Congress changed hands. The new majority thought that being paid for this type of time was too much. Congress passed an amendment to the FLSA, the Portal-to-Portal Act (“PPA”). In a nutshell, the PPA required that unless an employee was performing his or her primary duties or essentially spending time getting ready to perform those duties that employee was off the clock. In other words, if an employee was a construction worker, the employee had better be banging hammers and nails or doing something that aided in getting ready to be banging hammers and nails, like putting on protective gear, to be compensated for that time. The PPA also specifically took “walking, riding, or traveling to and from the actual place of performance of the principal activity” off the table as compensable work. 29 U.S.C. § 254(a)(1).

In this respect, the above-mentioned travel time examples are unlikely to be compensable time under the federal law, the FLSA. The problem for employers who are not careful, however, is that the FLSA is a legal floor. Nothing in the FLSA prevents states or localities from enacting more expansive legal and regulatory schemes that make travel time compensable. 29 U.S.C. §218(a).

This issue most recently came to a head in the Maryland Supreme Court in Amaya v. DGS Constr., LLC, 479 Md. 515 (Md. 2022).1

The construction worker plaintiffs in Amaya filed suit for the time that they alleged they were required to spend at a parking area waiting for a bus to take them from the parking area to the worksite location, where they would be banging hammers and nails, and again at the end of the day when they were required to take the bus back from the worksite location to the parking area. The employers argued that Maryland law followed the federal PPA, and such travel time was not compensable. But the Maryland Supreme Court disagreed, explaining that “the PPA has

not been adopted or otherwise incorporated in Maryland’s wage enforcement laws.” Id. at 556.

In other words, Maryland did not follow the PPA floor and had a much more expansive definition of compensable work. As the Maryland Supreme Court explained, “It would be inconsistent with the plain language of the [Maryland law] provision to require that an employee be engaged in the performance of actual physical labor or the performance of the principal work activities of employment in order to be compensated for hours of work.” Id. at 572. The court then further explained that if these employees were required to ride the bus, they should be paid, stating, “It follows that hours of work would include time that an employee spends traveling from one prescribed workplace or location for which the employee is required to be on duty or required to be on the employer’s premises to another such location.” Id.

requirement that if the boss tells an employee to be somewhere, he or she is “on duty” and should be compensated. See Heimbach v. Amazon.com, Inc., 255 A.3d 191 (Pa. 2021). California is another state with a broad definition of compensable time, which includes “[w]hen an employer directs, commands or restrains an employee . . . [such] that [the] employee remains subject to the employer’s control.” Morillion v. Royal Packing Co., 22 Cal. 4th 575, 583 (Cal. 2000).

The bottom line for employers is that if you do not want to run afoul of your legal obligations, then you might want to stay out of your employees’ transportation decisions. However, if you want to dip your toe in employees’ travel time waters, make sure you have an attorney or advisor that knows the local and state laws well. Otherwise, the federal floor might fall out beneath you, leaving you open to significant liability.

Importantly, Maryland is not alone. Its neighbor directly north, Pennsylvania, has a similar

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Brian J. Markovitz is a Principal in the Labor and Employment practice at Joseph, Greenwald & Laake, P.A. in Washington, D.C.

Building Equitable Pay Ranges In The Age Of Transparency

Fairness, compliance, and talent attraction through pay transparency

By Kyle Holm, Sequoia

Intoday’s evolving employment landscape, pay transparency is becoming increasingly important for businesses of all sizes. As more states implement pay transparency laws, companies are adapting to ensure they’re not only meeting legal requirements but also fostering a culture of fairness and equity by establishing pay ranges.

The Shift Towards Pay Transparency

The push for pay transparency has been driven by a combination of cultural shifts, and legal changes. Younger generations of workers expect transparency in pay, and more states have implemented pay transparency laws requiring employers to disclose compensation within job postings and/or when employees ask.

While some businesses may be adding pay ranges on a case-by-case basis, this ad hoc approach can lead to

inconsistencies and potential issues down the line. Instead, you should consider building pay ranges for all current and future roles, ensuring pay aligns with the market and your overall compensation philosophy. Companies that are set up with comprehensive and consistent pay ranges in response to the shift toward pay transparency will also be better positioned to attract and retain top talent.

Lay the Foundation for Sustainable Growth

By establishing pay ranges, you’re setting the stage for scalable and equitable growth. This approach helps you avoid the need for temporary fixes and backtracking later on. Having pay ranges clearly defined impacts companies in meaningful ways that include:

1. Compliance with pay transparency laws

By proactively building a pay philosophy and ensuring that

your salary ranges are consistent and compliant, you can avoid potential legal issues and fines associated with non-compliance.

2. Better-quality candidates

Job seekers are increasingly considering pay transparency when evaluating potential employers. By providing clear and competitive salary ranges, you can attract top talent to your organization.

3. Ease of scalability and forecasting

With well-defined pay ranges, you can reduce the workload on lean HR and recruiting teams who often must develop offers for each role on the spot or in reaction to negotiations. Those same pay ranges can be used by your finance team to help budget for future needs as your organization looks to scale.

4. Ensuring pay equity

Getting compensation right on day one is important for companies focused on pay equity. By using defined pay ranges and consistent guidelines to set compensation levels, you can reduce the biases that may come into play when setting compensation without guardrails.

Build Pay Ranges with Confidence

With compensation tools, you have the tools to build pay ranges that are informed by real-time market data, leveled for every job in your org, and aligned to your

compensation philosophy to keep pay competitive, equitable, and within budget.

As you begin building pay ranges, consider:

1. What pay transparency regulations are relevant to your company?

2. What’s the impact on your current employees?

3. What should pay ranges be for new roles?

4. How will you communicate ranges with consistency?

Kyle Holm is VP of Total Rewards Advisory at Sequoia .

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“On-Call” Time Compensation: Practical Approaches To A (Possibly Costly) Dilemma

Understanding compensability under FLSA and New Jersey law for on-call time

By Mark Tabakman, Fox Rothschild

Introduction

Many employers require employees to be on call to respond to emergencies. Such employees will typically be on call overnight for a weekend or holiday. They certainly receive pay when they are called to work, but a sticky and often misunderstood issue is whether they need to be paid for all of their

hours in an on-call status, irrespective of whether they are sitting at home or are out and about living their lives. If the employer does not, when warranted, pay for bands of on-call time, the liability could be astronomical, especially if there are several employees (e.g., a class) involved.

Legal Framework

Where the facts demonstrate that an employee has been hired to spend time waiting to respond to the employer’s needs, the employee is traditionally described as having been “engaged to wait”, and such time constitutes compensable hours of work. Conversely, where the restrictions on the employees’ activities do not prevent them from pursuing their normal pursuits, such employees are described as “waiting to be engaged,” and such time is not compensable. That is the essence of the on-call compensability analysis/test under the Fair Labor Standards Act and New Jersey law (and many other jurisdictions).

Whether hours spent on call are compensable hours of work is a very fact-sensitive question based upon a variety of criteria, as interpreted by the U.S. Department of Labor and numerous courts. As explained in the federal regulations, “[a]n employee who is required to remain on the employer’s premises or so close thereto that he cannot use the time effectively for his own purposes is working while ‘on call’.” 29 CFR 785.17.

Furthermore, “[a]n employee who is not required to remain on the employer’s premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call.” Id. Where an employee who is on call is free to come and go as the employee pleases and

is also able to engage in personal activities during periods of idleness while subject to call, such time need not be compensated. 29 CFR 553.221(d). These principles also apply where an employee is required to carry a paging device and to report to work or otherwise to respond within a specified period of time.

Courts evaluate a variety of factors when determining whether an employee can use on-call time effectively for personal purposes, such as whether there are excessive geographical restrictions on an employee’s movements, whether the frequency of calls is unduly restrictive, whether a fixed time limit for response is unduly restrictive, whether the employee could easily trade on-call responsibilities, whether the use of a pager could ease restrictions, and whether the on-call policy was based on an agreement between the parties. If the calls are so frequent or the on-call time conditions so restrictive that the employee cannot effectively use the on-call time for his own purposes, the entire band of on-call hours would constitute hours worked.

The cases are extremely fact sensitive, and in the “totality” analysis, these cases often turn on the number of interruptions and response time in any given band of on-call hours. For example, in Wage Hour Opinion Letter No. 1609 (December 11, 1985), the Department of Labor ruled that ambulance personnel, who were required to respond from their home within three minutes, were determined to be working the entire time they were on-call. Similarly, in Renfro v. City of Emporia, 948 F.2d 1259 (10th Cir. 1991), the plaintiff firefighters were required to carry pagers and return to work within 20 minutes of being called.

The court, placing heavy emphasis on the undisputed fact that the employer called back each firefighter an average of 3-5 times per 24-hour period, concluded that the firefighters could not use the time effectively for personal pursuits. Another court has observed that the frequency of calls, presence of geographic restrictions while on call, and shortness of response time may so restrict employees that the time spent on-call is for employer’s benefit and, therefore, compensable.

In Norton v. Worthen Van Service, 108 Labor Cases ¶35,028 (10th Cir. 1988), employees who were on call twelve (12) hours per week to drive railroad crews to needed locations within Wyoming claimed that all their on-call time was compensable. The court found that despite the short response time (15-20 minutes) drivers spent their time between assignments at the homes of friends, in church, restaurants, pool halls and at a local gymnasium.

Thus, even though a condition of the plaintiffs’ employment required a restriction on their personal activities, the court concluded that this restriction did not substantially limit or restrict the drivers’ activities. In another case involving emergency medical technicians, who were on call twenty-four (24) hours per week with a ten-minute response time, were deemed to not be working since the restrictions still allowed these employees to carry on most of their regular activities.

Recommendations

In sum, the determination of whether on-call time is compensable will depend on the totality of the circumstances. If the facts show that the employee(s) are largely unfettered except for hours actually worked, then only those hours worked will be compensable. Factors such as speed of response time, the number of occasions employees are summoned to “active duty,” the use of pagers rather than requiring employees to be at home and geographic or other physical restrictions will determine whether the time is compensable working time.

If employees are consistently able to pursue other activities (e.g., hobbies, watch television, visit friends, part-time business, etc.) they will likely not be considered “working” during these hours even if they must respond to their posts within a relatively short time span.

To protect itself (and create the first piece of “evidence” as a defense to any lawsuit), the employer must implement a policy that addresses the elements described above. For example, the response time should be at least thirty minutes.

The policy must also recite that the employee has the unfettered right and ability to enjoy his own pursuits and all life activities. If employees have the flexibility to trade on-call shifts, that also will militate towards the non-compensability of the time. Such a policy, disseminated to affected employees (or, even better, signed off on by the worker) provides an employer with enhanced legal protection against wage claims, especially claims that “all” of the otherwise free time is working time.

Mark Tabakman is a Partner in the Labor and Employment Department at Fox Rothschild LLP. He counsels human resource professionals and in-house counsel in complying with the myriad federal/state employment laws to provide creative, practical and cost-effective solutions to employment issues and problems. Mark concentrates on wage-hour law. He has extensive wage-hour experience and has represented more than 200 clients before the United States and many state Departments of Labor on misclassification (i.e., white collar exemptions, independent contractor), working time, child labor, and other issues.

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