Phase One Individual RUNNING HEADER: PHASE ONE INDIVIDUAL PROJECT

Phase One Individual Project James Bowen Colorado Technical University Online HRM415-1103-B Professor Braun

Phase One Individual Phase One Individual Project As a company with paid employees it is crucial that we follow all the applicable employment laws. Companies that do not follow such laws can be subject to fines and costly

litigations. After reviewing Lansing-Smiths pay plans there are numerous areas for concern and areas for improvement. If we do not make some immediate changes we could face some of the fines and litigation that comes with not being in compliance with the Fair Labor Standards Act. The first order of business is to develop a new compensation plan that will be in accordance with the Labor Act and one that will have a pay scale in place. After conducting research on compensation plans I believe we need to start from the beginning and then slowly work our way up to more sophisticated a complex plans. In my report I will list several areas we need to address in the new compensation plan including the public perception of Lansing-Smith. With our current compensation it is leaving us vulnerable to fines or litigation because we are not in compliance with the Fair Labor Standards Act. The main violation is that we have all employees listed as exempt employees. This means that they are listed as not being able to receive certain benefits such as minimum wage and overtime. This is because our employees do not fall into this type of category since they are not recreation, seaman, fishing, certain agricultural, newspaper, babysitters or certain telephone employees(Exempt and Nonexempt Employees). In order to address these issues we need to reclassify all of the employees as non-exempt employees. A non-exempt employee is required to be paid at least minimum wage, over-time, child labor protection and equal pay(Exempt and Nonexempt Employees). Since we met none of the requirements for exempt employees this is why we must reclassify our workforce as non-exempt. Once we have reclassified the employees to be compliant with the Fair Labor Act then we need to implement a pay scale to pay employees

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based on their job titles, status, experience and education. Once we have these in place we should then begin to put a total compensation plan together for the entire company. If we are going to create a new compensation plan if would be good to know the reasons for having one. The reasons for having a compensation plan are to attract and retain employees, motivate them, payroll control and litigation avoidance (Why Design a Compensation Plan?). These are some very valid reasons for compensation plans but also a good reason is to be competitive with your benefits and compensation and also have a pay scale in place to pay for the position and the employees qualifications for that position. The pay scale is one of the top reasons for a compensation plan. The company has to be able to control the payroll expenses. Remember payroll is a companys most controllable expense. It is only logical to make the pay scale the focal point of the compensation plan. A major part of the pay scale is how overtime will be paid and to whom it will be paid. So first we must identify who will be eligible for overtime and who will not be. There are new overtime rules that have recently taken effect. There are new rules under the Fair Play Initiative Act that states that any workers outside of California who earn less that 455.00 a week or 23,660 a year are guaranteed to have overtime protection (Smedley). These new rules will apply to a large portion of our workforce. Many of our upper management and executives will not be eligible for overtime, but will be eligible for other merit incentives based on their positions As important as the pay scale will be that we are conforming to all EEOC regulations. Any deviations from the regulations can lead to fines and serious and expensive litigations against Lansing-Smith. Not only could the litigations and fines be costly, but could also lead to a negative public image for the company which could inhibit our ability to recruit top employees. In recent news you have seen companies being sued for unfair labor practices from

Phase One Individual discrimination to unfair wages. All the negative press and costly fines and litigations have cost these companies money and reputations. Lansing-smith is a small company and these financial and social mishaps would have a large effective on our company and one that would be difficult

to recover from. It could also cause low morale in the company if we are not treating our current employees as they should be as defined by the employment laws of the country. The pay scale and compensation plan would actually be a boost to moral because it our employees would now be eligible for benefits and compensations they were not permitted to have before. As we move forward in our compensation plan we need to ensure that the right decisions are made in the future as well as the changes were are preparing for our current situation. All of our current and future compensation decision should be made first and foremost to conform to all EEOC and other state and federal regulations. These decisions need to be made this way to avoid heavy fines and litigations a well as negative perceptions of Lansing-Smith. Next compensation decisions should be made so that we can keep our company competitive in recruiting top talents as employees. Finally as a combination of the first two is that we need to make decisions based on the financial capabilities of Lansing-Smith. We have a brief idea of the type of plan we want for a beginning point in a new compensation plan. After careful review of the previously plan Lansing-Smith is fortunate that we have not been fined or faced litigation prior to today. With so many violations in the previous compensation plan many employees were not guaranteed certain benefits allowed to them by federal guidelines. When creating a new compensation plan keep this thought in mind. A new compensation plan should allow a company to be flexible yet also keep the company from always facing an individual circumstance(How to Write a Compensation Plan). A compensation

Phase One Individual plan can say a lot about a company. It shows that a company is ethical as well as sociably viable by looking out for their employees both legally and socially.

References Exempt and Nonexempt Employees. (n.d.). Retrieved August 18, 2011, from www.toolkit.com: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P05_4037

Phase One Individual How to Write a Compensation Plan. (n.d.). Retrieved August 18, 2011, from www.ehow.com: http://www.ehow.com/how_2076418_write-compensation-plan.html Smedley, R. (n.d.). The Fair Play Initiative. Retrieved August 18, 2011, from www.content.silaspartners.com: http://content.silaspartners.com/383/47875/383_47875_Aug04CMR.smedley.pdf Why Design a Compensation Plan? (n.d.). Retrieved August 18, 2011, from www.companalysis.com: http://www.companalysis.com/about/compensation.html

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