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A legal perspective on human resources idiosyncrasies in the Golden State

By Mishell Parreno Taylor and Deidra A. Nguyen Aug 22, 2017

This is the second article in a three-part series about California-specific workplace compliance issues. Part One focused on four leave-law idiosyncrasies.

Wage and hour compliance in California can be complicated, particularly in light of the ever-changing landscape. On Jan. 1, 2017, alone, employers faced approximately 30 new or amended state or local labor and employment requirements—many of which focused on wage and hour compliance.

Below are just a few areas for businesses to be mindful of if they have employees working in California.

1. Daily Overtime

While the federal Fair Labor Standards Act requires overtime to be paid at one and one-half times a nonexempt employee's regular rate of pay for all hours worked beyond 40 in a workweek, the Golden State takes it one step further.

Employers in California must also pay nonexempt workers one and one-half times their regular rate for all hours worked over eight in a day.

In practical terms, this means that an employee who works less than 40 hours in a week may still be entitled to overtime if he or she works more than eight hours in a given day. The good news is that the law does not require employers to pay both daily and weekly overtime when doing so would result in paying overtime on hours that are already being paid at an overtime premium.

It is important to be mindful that California daily overtime requirements may be applicable to employees who work in California even on a temporary basis. Furthermore, employers should note that they must pay double time in some circumstances.

2. Rest Breaks

Under California law, an employer must "authorize and permit" employees to take a 10-minute rest break for each four hours or "major fraction thereof" worked. The following table illustrates what this means based on hours worked:

 

The good news is that if an employee's workday is less than three and a half hours, employers are not required to provide a paid rest break. Another piece of good news is that a critical wage and hour decision (Brinker v. Superior Court), rendered over five years ago, brought clarity to what is required of a California employer when it comes to rest break obligations.

As confirmed by the court in Brinker, a California employer only has to provide its eligible employees with the required rest breaks and does not have to force employees to take them.

Failure to comply can be costly. An employer that doesn't provide an employee with a timely rest period will face a penalty of one hour of pay for each day the break was not offered.

3. Alternative Workweek Schedules

The alternative workweek schedule is a tool, common in manufacturing industries, that provides employers some reprieve from daily overtime requirements while imposing very specific and unusual procedural requirements.

Nonexempt employees in a pre-existing, identifiable work unit or group may elect to work a defined schedule that differs from the standard schedule of eight hours per day, five days per week without receiving daily overtime.

For example, employees may elect to work a four-day schedule of 10 hours each. While such a schedule would ordinarily require payment of two hours of daily overtime for each day of the schedule, a properly adopted alternative workweek schedule obviates the requirement to pay daily overtime. 

To properly adopt an alternative workweek schedule, the employer must:

• Select an identifiable group or unit in the workplace that will work the alternative workweek schedule (e.g., a shift, department or facility).
  
• Disclose to employees within the affected group or unit how the alternative workweek would impact employees' working conditions, including their wages, benefits and hours.
  
• Conduct in-person meetings with affected employees to allow employees to ask questions about the proposed alternative workweek schedule.
  
• Conduct an election—at least 14 days after the meeting—by secret ballot, during which affected employees can vote on whether to adopt the proposed alternative workweek schedule.
  

If at least two-thirds of affected employees vote in favor of the alternative workweek schedule, the employer may require employees to begin working the new schedule no sooner than 30 days after the election and must report the results of the election to the California Division of Labor Statistics and Research.

Although alternative workweek schedules are a useful tool because they eliminate the need for daily overtime, they greatly limit scheduling flexibility and impose costly repercussions for work outside of the defined schedule.

4. Fair Scheduling

Fair scheduling, also called predictable scheduling, represents a burgeoning area of the law that—like many employment laws—started in San Francisco and is systematically taking root across California (and in other states, too).

In November 2014, San Francisco passed two ordinances imposing scheduling requirements on private employers. The cities of San Jose and Emeryville followed suit, passing fair-scheduling laws that took effect earlier this year.

Outside of California, New York City and Seattle have passed fair-scheduling laws and Oregon just enacted the first statewide law.

Although the laws differ in each jurisdiction, they generally embrace one or more of the following requirements:

• A good-faith estimate of the employee's anticipated work schedule prior to or at the commencement of employment.
  
• Employees' right to request input into their work schedules.
  
• The right to rest between work shifts.
  
• Advance notice of the work schedule.
  
• Compensation for schedule changes.
  
• Offers of work to existing employees before hiring externally.
  

Employers should note that some of these laws apply to large retail and hospitality employers while others have a broader reach.

California's ever-evolving wage and hour laws, and the accompanying penalties for even minor violations, highlight the importance of periodically reviewing and possibly updating handbooks and policies on wage and hour practices. Additionally, training a workforce on an employer's updated policies and how to properly partner with human resources on compliance-related matters are key components of successful compliance.

Up next in our three-part series will be a discussion on the expansive and highly regulated area of anti-discrimination laws in California.  

Mishell Parreno Taylor and Deidra A. Nguyen are attorneys with Littler in San Diego. 

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/4-wage-and-hour-challenges-california.aspx

By Lisa Nagele-Piazza, SHRM-SCP, J.D. Jul 28, 2017

Flexible work arrangements—such as telecommuting and compressed workweeks—can benefit businesses and workers alike, but California employers that wish to offer such arrangements must tackle complex workplace compliance issues. Here's what employers in the state need to know.

Workplace flexibility or "workflex" options are important to employees. Having the flexibility to balance work and life obligations is among the top three benefits rated as "very important" to employees (just behind paid time off and health care benefits), according to the Society for Human Resource Management's (SHRM's) 2016 Employee Benefits survey. 

Many California employers are embracing workplace flexibility. SHRM research shows that organizations in the state are providing employees with the following workflex options:

• Telecommuting (63 percent).
  
• Flextime (48 percent).
  
• Mealtime flex (34 percent).
  
• Flexible break arrangements (30 percent).
  
• Compressed workweek (23 percent).
  
• Shift flexibility (21 percent).
  

"At its core, workflex is about improving business results by giving people more control over their work time and schedules," according to SHRM.

While there are many benefits to offering flexible work arrangements, unique challenges can arise for employers that offer flexible work arrangements in California, said Helen McFarland, an attorney with Cozen O'Connor in San Francisco and Seattle.

"The most important challenge that employers face in offering flexible work arrangements is to properly manage compliance with California's wage and hour requirements and the company's security policies," said Grace Horoupian, an attorney with Fisher Phillips in Irvine. 

For example, she said, employers may have difficulty ensuring that employees who are working remotely are not working off the clock and are accurately recording all hours worked.

Employers may also find it challenging to ensure employees follow the company's information security requirements when working from home, Horoupian added.

California Laws to Consider

Employers that want to offer workflex options should keep the following state rules in mind:

• Daily overtime pay. Nonexempt employees in California are entitled to daily overtime at a rate of time-and-a-half after eight hours and double time after 12 hours. "If an employer offered four 10-hour shifts rather than five eight-hour shifts, in California, unlike many other states, the employer would be required to pay overtime for the extra two hours worked each day," McFarland explained. "Ten-hour shifts would also mean potentially offering two meal periods rather than one," she added.
  
• Alternative workweeks. In certain situations, employees waive their right to daily overtime pay and work regular shifts that exceed eight hours in a day. Employees can vote by secret ballot to approve such an alternative work schedule for a work unit (such as a department, team or job classification)—but employees still must receive overtime pay if they work more than 10 hours a day or 40 hours a week under those arrangements. "Unless an alternative workweek is in place, a compressed workweek means that daily overtime requirements must be met," Horoupian said.
  
• Meal and rest breaks. Nonexempt employees must also be provided rest breaks and meal periods at certain times and for certain durations during a shift. "Employees working remotely lack supervision and would be responsible for documenting their own work hours and meal and rest breaks," McFarland noted.
  
• Make-up time. Employees can make up work time that is missed for personal obligations without counting the made-up time as overtime hours if certain conditions are met. The employee must voluntarily request the make-up time, and it must be worked in the same workweek as the missed time, and time worked can't exceed 11 hours in a day or 40 hours in the workweek.
  
• Business expense reimbursement. California employers must reimburse employees for all business expenses they incur, McFarland said. This can make remote work arrangements complicated because California employers must pay for and establish remote workstations, she said. "This could include Wi-Fi fees, additional computer equipment and other unforeseen costs."
  

HR's Role

"Employers should establish clear, written policies regarding all flexible work arrangements and make sure to apply their policies fairly and evenly," McFarland said.

Horoupian said remote work policy should address:

• The hours that the employee is expected to work.
  
• Specifics of how to comply with information security policies.
  
• The need to keep accurate recordings of hours worked.
  
• How and when to report work-related injuries.
  
• Office attendance requirements.
  
• The company's right to revoke the remote work option at any time.  
  

Employees should sign an acknowledgment that they received and reviewed the remote work policy.

"Employers should also have all hourly employees working remotely sign an attestation that their reported hours of work are accurate," Horoupian added.

"Communication regarding expectations is key," McFarland said. "It may be beneficial to set up a trial period to determine whether the new system is workable and effectively meets the employer's and the employees' needs."

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/CA-flexible-work-arrangements.aspx?utm_source=SHRM%20PublishThis_CaliforniaHR_7.18.16%20(20)&utm_medium=email&utm_content=August%2008%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=30097271&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1100936027&spReportId=MTEwMDkzNjAyNwS2

Restrained pay raises likely to continue next year

By Stephen Miller, CEBS Aug 7, 2017

With salary increase budgets expected to remain at 3 percent for both 2017 and 2018, employers are continuing to leverage variable pay to differentiate rewards for high-performers.

"With a tight job market and reported financial gains, we might have expected to see more growth in salaries," said Kerry Chou, WorldatWork senior practice leader. "In the United States in particular, there are factors that might explain this plateau in growth, including the increased use of variable pay or noncash-based rewards."

Variable Pay

As companies hold down base pay increases to maintain a handle on fixed costs, "employees are still seeing increases in pay through improved variable pay plan payouts," Chou said.

The percentage of organizations using variable pay vehicles—such as annual or quarterly bonuses based on individual, team and organizational goal achievement—rose 1 percentage point for the third straight year, to 85 percent in 2017, according to research from WorldatWork, an organization of total rewards professionals, in its new 2017-2018 Salary Budget Surveyreport.

Variable Pay Programs (U.S.) Variable pay awards, representing a percentage of base pay, are differentiated by employee classifications. Results are shown for the median* percentage.
	Nonexempt Hourly Nonunion	Nonexempt Salaried	Exempt Salaried	Officers/ Executives
Average percent paid, 2016	5.0%	5.0%	11.0%	34.0%
Projected percent paid, 2017	5.0%	5.0%	12.0%	35.0%
Source: WorldatWork. *The median is the middle value after listing reported budget increase expectations in successive order. Outliers, or extreme values on either the high or low end, have less effect on the median than on the mean, which is the mathematical average.

The report reflects the results of a survey of WorldatWork members, most of whom work at large companies. Survey data was collected from March 27 through May 5 and included 1,819 respondents from U.S. organizations with at least 10 employees. "Top level" results from the survey were released last month.

Merit Salary Increase Awards

Base salary increases are being awarded to 89 percent of employees in 2017, on average. For high-performers, the anticipated 2017 median merit increase award remains at 4.0 percent, the same as last year. 

2017 Merit Increase Awarded by Performance Category Results are shown for the median percentage.
	High Performers	Middle Performers	Low  Performers
Percentage of employees estimated to be rated in this category	22%	70%	5%
Average merit increase estimated for this performance category	4.0%	3.0%	0.0%
Source: WorldatWork.

Minor Regional Differences

As in recent years, a comparison of salary budget increases among employers in different states for 2017 showed little variance. The average (mean) increases ranged slightly from 2.9 percent to 3.1 percent, with the median at 3.0 percent for every state.

Metropolitan areas showed a bit more average salary budget variance this year, ranging from 3.0 percent to 3.3 percent.

"The metropolitan areas that show the highest percentages, such as the Pacific Northwest, Los Angeles, Dallas or Atlanta, tend to be in regions of the U.S. that are driven by high-tech or minimum-wage increases," Chou noted.

No city came in below the 3 percent number. The highest average salary budget increases this year were in:

• Atlanta: 3.3 percent.
  
• Dallas: 3.2 percent.
  
• Los Angeles: 3.2 percent.
  
• Portland, Ore.: 3.3 percent.
  
• San Francisco: 3.2 percent.
  
• San Jose, Calif. 3.2 percent.
  
• Seattle: 3.2 percent.
  

These findings also may in part reflect local and state government increases to minimum-wage rates, Chou said.

Another View of Merit Pay

Separately, New York City-based compensation firm Empsight shared preliminary results from its 2017 Policies Practices and Merit Report during a webcast at the end of July. The findings are based on mostly multinational and Fortune 500 companies in the firm's client database (70 percent with revenues above $5 billion).

The firm provided this comparison of merit increase budgets for 2017 and 2018.

Merit Increase Budget for 2017
Employee Category	Mean	25th Percentile	Median	75th Percentile
Executive	2.79%	2.50%	3.00%	3.00%
Management	2.76%	2.50%	3.00%	3.00%
Professional	2.77%	2.50%	3.00%	3.00%
Support/Nonexempt	2.78%	2.50%	3.00%	3.00%
Source: Empsight.

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Merit Increase Budget for 2018
Employee Category	Mean	25th Percentile	Median	75th Percentile
Executive	2.81%	2.50%	3.00%	3.00%
Management	2.82%	2.50%	3.00%	3.00%
Professional	2.82%	2.70%	3.00%	3.00%
Support/Nonexempt	2.82%	2.70%	3.00%	3.00%
Source: Empsight.

"Overall, merit budgets remained the same from 2016 levels across all industries," said Susan Bell, principal consultant at Empsight. While slightly higher budgets were found in the professional service, pharmaceutical, energy and consumer product sectors, "overall, merit budgets remained the same from 2016 levels across all industries," she said.

"The forecast appears slightly higher in 2018 merit projections versus 2017, but not by much," she noted. "Expectations are that spending will remain the same."

Total compensation increase budgets, which include merit increases, promotions and special adjustments, ranged between one-quarter to one-third percent on top of merit increases, Empsight found.

Total Compensation Budget Forecast for 2018
Employee Category	Mean	25th Percentile	Median	75th Percentile
Executive	3.22%	3.00%	3.00%	3.50%
Management	3.23%	3.00%	3.00%	3.50%
Professional	3.23%	3.00%	3.00%	3.50%
Support/Nonexempt	3.24%	3.00%	3.00%	3.50%
Source: Empsight.

"The 2018 forecast expects about the same spending across job levels, which is up only slightly from 2017," she noted. Overall total compensation budget increases are forecast to increase 3.25 percent (mean) and 3.00 percent (median) for 2018, compared with 3.21 percent (mean) and 3.00 percent (median) for 2017.

"Companies tend to target the median of the marketplace for both base and total cash compensation," added Jeremy Feinstein, Empsight managing director.

"For almost the last eight years, it's been a 3-percent merit world," limiting employers' ability to use pay to foster employee retention, he noted.

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/salary-raises-variable-pay.aspx?utm_source=SHRM%20Monday%20-%20PublishThis_HRDaily_7.18.16%20(54)&utm_medium=email&utm_content=August%2007%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=30076108&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1100791438&spReportId=MTEwMDc5MTQzOAS2

Madeline Farber

Jul 19, 2017

Madeline Farber

Jul 19, 2017

Employers in San Francisco soon won't be allowed to ask job applicants about their salary history.

The new city law, which was signed by Mayor Ed Lee on Wednesday and is going into effect next year, aims to narrow the wage gap between men and women. Philadelphia and New York have passed similar laws, based on the idea that questions about salary history solidify the gender pay gap, making it difficult for women to escape a cycle of being paid less than men at each new job they take.

Equal pay advocates hailed San Francisco's move as a way of removing that disadvantage to women, but the question remains: How effective will the new law be?

"We want results immediately," says San Francisco Board of Supervisors member Mark Farrell, who sponsored the equal pay measure, which passed the board unanimously and has faced little opposition. "Practically speaking, as more and more women interview for jobs, it should have an immediate impact. When that aggregates to statistical differences — that will take a longer time. But you have to start somewhere."

According to recent data from the U.S. Census Bureau, women in San Francisco earn 84 cents for every dollar that their male counterparts make, only slightly better than the national average of 82 cents for every dollar. There are already federal laws on the books to address the issue, including the Equal Pay Act of 1963, which outlawed wage discrimination based on gender. But there are subtler forms of disadvantage for women than outright discrimination, and that's what San Francisco's new law aims to tackle.

Here's what experts say are the benefits and pitfalls of the new law:

It's a start

Equal pay advocates have largely praised the law, saying that while it won't erase the wage gap, it's better than nothing. The law "makes it less likely that inequities earlier in your career shape your entire career," says Emily Martin, general counsel and vice president for workplace justice at the National Women's Law Center, a non-profit organization that advocates for women's rights through litigation and policy initiatives.

Martin expects the law to prompt companies to think "more rigorously about how to set pay." She believes companies will begin setting clearer scales for compensation based on metrics such as experience and skills, instead of relying on an applicant's salary history.

Some companies have already started doing this. The Massachusetts-based Eastern Bank, for example, has previously said it reviews compensation data regularly to ensure any variation in pay for employees in the same or similar positions is based on experience and performance, not past salary history.

I ntel, too, uses similar metrics. In 2015, the company conducted an equal pay audit by comparing employees by job type and education level, experience, performance and responsibility — later reporting that it does not have a gender pay gap.

The law won't just benefit women

Taking a different approach when setting pay isn't just good for women, Martin says.

"Asking about salary history harms a lot of people, like people of color who tend to have lower wages, and people who are moving from the non-profit sector to the for profit-sector. It even harms people who are maybe trying to enter a new field and are willing to take a pay cut," she says. "It's a step toward fairer pay structures and benefits working people more broadly."

For example, Pew Research Center found that African Americans earned 75% as much as white workers in median hourly earnings in 2015, another gap that could be narrowed if companies stop asking about salary history.

But there are potential loopholes

While the new law prevents employers from asking about salary history, there's a significant loophole, experts say: Employers can still ask applicants about their salary expectations. And since women who are making less money than men may give lower numbers for their expected salary, that question could lead to potentially unequal pay, says Joelle Emerson, who founded a diversity consultant group called Paradigm.

"Often with these laws, it's not always so hard to get around it. If an employer asked about salary expectations, a candidate will give an answer that's grounded in their current salary," Emerson says. In other words, "these laws aren't necessarily going to eliminate the pay gap."

And it doesn't solve the issue of salary negotiations

Even if women are offered the same starting salary as men, women still tend to make less money because they are less likely to negotiate their salary. Women may choose not to negotiate because they lack confidence on how to do it, or because doing so presents a socially awkward situation, known as the "social cost" of negotiation. Research shows that women who don't negotiate are leaving money on the table, and it's a major reason that the gender wage gap still exists.

That's why Emerson suggests that companies limit salary negotiations, or stop doing them altogether. At Paradigm, for example, job candidates are told salary negotiations are not allowed — unless the candidate suggests that the salary being offered is lower than it should be. If Paradigm agrees with the candidate, the salary for everyone in the same role is adjusted accordingly. So far, Emerson says this has happened twice.

Accenture, a professional services company, GoDaddy, and Jet.com are other companies that have prohibited salary negotiations. Jet.com, for instance, eliminated salary negotiations in 2015 and instead implemented a compensation structure with 10 levels that sets all employee salaries based on position.

While there's still more to do, Emerson is optimistic that the San Francisco law will make a difference. "I think that having greater clarity will push companies to reflect more on their processes, and decide to take a different approach when determining pay," she says.

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Source: Fortune.com 

http://fortune.com/2017/07/19/san-francisco-salary-history-law/

• Gen Xers borrow the most from their 401(k) plans
• Boomers participate in 401(k) plans at a greater rate than younger coworkers, but investment diversification lags

CHARLOTTE, N.C.--(BUSINESS WIRE)--Rates of saving for retirement and investing habits differ from one generation to the next, according to a recent analysis of four million people who participate in 401(k) plans provided by Wells Fargo. Retirement plan data for Boomers, Generation X, and millennials reveal ways each generation can learn from the others when it comes to saving for retirement. The full analysis can be found in the Wells Fargo 2017 Driving Plan Health report.

Millennials show 13% gain in participation in past five years

Millennials have demonstrated the biggest gains in the percentage of those participating in their 401(k) plans over the last five years, with an increase of 13.3%. They’re also the most-diversified generation, with 83% meeting Wells Fargo’s minimum diversification goal*. This diversification number drops to 80% for Gen X and 77% for Boomers. In addition, 30% of millennials contribute enough to maximize their full employer match when one is offered. This number falls to 27% for Gen X and 25% for Boomers.

“This engagement among millennials is encouraging because the sooner they get started, the more prepared they will be for retirement — they have the power of time to help grow their nest egg,” said Mel Hooker, director of relationship management for Wells Fargo Institutional Retirement and Trust. “This generation is benefitting from legislation that made it easier for employers to automatically enroll employees into their 401(k) plan, and from the use of default investments that help them meet a minimum level of diversification.”

Millennials are also the greatest users of Roth 401(k) plans, which allow participants to contribute after-tax income. Millennials use this option, when offered by their employer, at a rate of 16% compared to 11% of Gen X and 8% of Boomers.

“It’s important to note that the use of Roth 401(k) plans is an intentional choice on their part, perhaps as a tax diversification strategy,” added Hooker.

*Minimum diversification goal in 401(k) plans is defined by Wells Fargo as when a participant is either (1) invested in a diversified investment option such as a target-date fund, managed account product, or comprehensive advice program, or if they are self-directed or (2) invested in at least two different classes of equity funds and at least one fixed income fund and less than 20% invested in employer stock.

Diversification and asset allocation do not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Is Gen X feeling the squeeze?

Gen X has seen an 11% uptick in participation over the last five years. However, they’re leading the pack in loans from their 401(k) plans: 25% of Gen X participants have a loan, compared to 16% of millennials and 19% of Boomers.

“This may be a case of sandwich-generation syndrome, in which people are juggling the challenge of raising kids and helping aging parents — all during a period of increasing financial complexity in their lives,” said Hooker. “Unless you need the money for an emergency, however, it’s best to resist the urge to tap your retirement funds. And if you need to do it, be sure to understand the terms.”

While many 401(k) plans allow participants to borrow from their 401(k) accounts, there can be some unintended consequences that people need to be aware of before making that decision.

• Smaller retirement savings: When you take out a loan, you are losing the benefits of investment growth, and that could leave you with a smaller retirement savings. How much smaller? This depends on a number of factors, including the size of the loan, the repayment period, whether you continue contributions during this period, the earnings on your account, and the loan interest rate. Also, if you stop contributing while you are paying back your loan, you won’t receive any employer matching contributions.
• Repayment requirements: If you lose your job or take another one, you’ll have to repay the money quickly, usually within 30 to 60 days. If you can’t, the IRS considers the money you’ve taken out to be a withdrawal, which means you’ll have to pay taxes — and if you’re under age 59½, you may owe a penalty as well.

Boomers participate at higher rates, but lag in diversification

Early this year, the first wave of Boomers turned 70½, reaching the age at which they are required to start drawing down their 401(k) savings. As this population nears retirement, the number of those participating in their plan has increased by 8.3% over the last five years; although this is a lower rate of increase than millennials and Gen X, overall more Boomers participate than younger generations.

A little over a third of all participants are more conservative in their own investments than a typical target-date fund appropriate to their age. But more than half of Boomers have greater equity exposure than an age-appropriate target-date fund, which could expose them to significant investment risk.

“It’s a delicate balance; lower returns for overly conservative participants can hurt balances in the home stretch to retirement, but overly aggressive participants face an even larger potential threat to their retirement income in the form of investment risk,” said Hooker. “It’s important to encourage employees to create a plan for saving and stick to it. Consistency in contributions and diversification are a better path to success than chasing returns or trying to time the market, because retirement success is a long-term proposition.”

Who is on track?

For the purposes of setting a goal and tracking progress, Wells Fargo measures the percentage of participants on track to replace 80% of their pay in retirement*, and it appears that many of the behaviors in which millennials take the lead are pointing to a higher percentage on track: 66% of millennials are on track to reach this goal in retirement, compared to 51% of Gen X and 41% of Boomers.

*Income replacement assumptions include a goal of replacing 80% of income during retirement, a retirement age of 65, and Social Security beginning immediately. In addition, the calculation assumes income increases of 2% per year, investment returns averaging 7% annually before retirement (and 4% after retirement), and 3% annual inflation in retirement.

How employers are helping

While there are many ways employers can help their employees save more for retirement, this analysis points to some stand-out opportunities for employers.

1. Closing the participation gap through automatic enrollment

While participation remains lowest among younger, more recently hired, and lower-earning employees, these populations have seen greater gains than their counterparts, leading to a narrowing of the participation gap for all three demographic dimensions. The biggest driver? Automatic enrollment — when this younger age group is automatically enrolled, 85% stay in the plan. In the absence of automatic enrollment, the participation rate falls to 38%.

2. Increasing default deferral rates

When employers automatically enroll their employees in the 401(k) plan, the most common default deferral rate is 3%. At this rate, 11.1% of people opt out of the plan — meaning nearly nine in 10 employees stay in the plan. However, when people are automatically enrolled at a 6% contribution rate, participants have a nearly identical reaction, with 11.3% opting out of the plan. Given contribution-rate challenges, defaulting employees at a higher contribution rate to begin with may help significantly.

3. Automating regular contribution increases

Today, 20% of plans include a feature that automatically increases their employees’ contribution rate on a regular basis (often annually) and requires employees to take action to turn it off, or “opt out.” This is a significant uptick from 8% of plans that offered this feature in this fashion five years ago. In addition to encouraging higher contribution rates by defaulting employees into a plan at a higher rate to begin with, adding automatic contribution increase as a feature employees need to elect to turn off, rather than offering it and making them take the steps to turn it on, will drive employees to a 10% contribution rate more quickly than if they simply stagnate at the automatic enrollment contribution rate.

“Employers don’t have to guess anymore. The data reveal exactly what they need to do to move the needle on each behavior,” said Hooker. “In particular, when we see retirement plan contribution rates are in a stagnant state relative to other important behaviors, we can put in place the plan design features that will help improve this metric. Employers can use the data to inform their decisions based on their defined goals for helping their employees save for retirement.”

See also:

• Tips for plan sponsors: 6 ways to build effective 401(k) plans
• Tips for employees: 6 things you can do today to boost your 401(k)

Investment and Insurance products:
Not Insured by FDIC or any Federal Government Agency			MAY Lose Value			Not a Deposit of or Guaranteed by a Bank or Any Bank Affiliate

Recordkeeping, trustee, and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank, N.A.

Wells Fargo Bank, N.A. and its affiliates, including their employees, agents, and representatives, may not provide “investment advice” to any participant or beneficiary regarding the investment of assets in an employer-sponsored retirement plan. Please contact an investment, financial, tax, or legal advisor regarding your specific situation.

About Wells Fargo

Wells Fargo & Company (NYSE:WFC) is a diversified, community-based financial services company with $2.0 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 273,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

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Source: Wells Fargo

https://newsroom.wf.com/press-release/wealth-and-investment-management/wells-fargo-millennials-make-greatest-gains-401k

Skipping preventive care can lead to greater expense later on

By Stephen Miller, CEBS Jul 18, 2017

One in 4 employees who have dental insurance say they haven't been to the dentist in the past 12 months for regular checkups and routine cleanings due to cost, a new study shows. This indicates that employees may lack adequate understanding about their dental benefits, because dental plans typically cover preventive care, outside of any deductible, the study authors said.

While a majority of U.S. adults believe dental coverage is a "must-have" employee benefit, only half of employees feel that their employer provides enough information about what is covered under their plan, according to the 2017 dental research study by benefits provider Lincoln Financial Group, which received responses earlier this year from 1,000 adults across the U.S.

"Consumers may not be taking full advantage of their dental benefits due to a simple lack of knowledge about their insurance plans," said Christopher Stevens, head of dental product management at Radnor, Pa.-based Lincoln Financial. "Often, dental insurance will fully cover the cost of preventive care such as annual or biannual dental checkups and cleanings. If one-quarter of these individuals—who indicated they have dental coverage—responded that they aren't going to the dentist because of cost, they're probably not making that connection."

Among other survey findings:

• 65 percent of consumers want their employer to provide general information about what's covered by their dental insurance plan.
  
  
• 54 percent say they'd like their employer to provide a list of local in-network dentists.
  
  
• 34 percent say they would appreciate ratings or rankings of in-network dentists.
  

Older Workers Less Satisfied

Overall, just over half (51 percent) of respondents agreed that their employer was a good resource when they needed to understand exactly what their dental benefits cover, which suggests that employers should step up their communication about their plans, Stevens noted.

"The share of those satisfied with employer information declines steadily with age, in line with older workers' increased use of dental services," he pointed out. Among older Baby Boomers, for instance, just 34 percent agreed that their employer was a good resource for dental benefit information.

Addressing Misperceptions

"Sometimes people forget that they have dental coverage, or how imperative it is to go for regular treatment," said Scott Towers, president of the Eagan, Minn.-based dental division at Anthem, a national health insurance provider. "If you don't have a regular dentist that you see, you aren't getting those reminders that it's time for your next visit," he noted.

While fear of the dentist—or "dental anxiety"—is one thing that prevents people from getting regular checkups, misperceptions about the cost of routine dental services is also a leading reason why so many go without care, Towers explained.

For instance, employees facing higher deductibles on their medical plans may not realize that under most dental plans—well over 90 percent—diagnostic and preventive treatment are fully covered outside of a deductible, Towers said. (A similar issue affects medical plan use, with many enrollees not knowing that annual physicals and other preventive health services are fully covered outside of their health plan's deductible.)

Higher Out-of-Pocket Costs

While plan enrollees aren't taking advantage of diagnostic and preventive services covered outside the deductible, they are paying more out of pocket for nonpreventative dental services and for plan premiums, Towers acknowledged.

For instance, while many employers formerly provided dental care as a fully employer-funded benefit, "We've seen an increase in dental insurance as a voluntary benefit, with coverage becoming either fully employee-paid or with employees paying at least 50 percent of the premium cost," Towers explained. A decade ago, a $25 individual deductible and a $1,000 annual maximum for a dental plan were common, but "today, the most frequent plans that we offer have a $50 individual deductible and a $1,500 annual maximum," he said.

While some employees worry that a dental visit will reveal a need for treatment that they will then have to pay under the deductible, "appropriate preventative dental services ensure that less serious and invasive procedures are needed down the road, especially for adults running into periodontal issues," he said. Avoiding the dentist, in other words, can be expensive—a message that should be emphasized in dental benefit communications.

Getting the Message Across

"We're seeing the increasing use of interactive tools, including online apps and digital platforms, where information on dental coverage is provided along with contact links for in-network dentists," Towers said.

For at-risk populations with chronic medical conditions, "health coaches can reach out to remind them of the impact that their oral health can have on their medical conditions," he noted. For instance, oral infections caused by periodontal disease can pose serious health risks for diabetics or those with chronic heart disease. Care managers can reach out and remind enrollees from at-risk populations when they haven't been to the dentist in six months.

Under an integrated care management approach, medical, vision and dental insurance typically are still provided through separate plans, but "outreach and communications are coordinated to address care issues across the spectrum of health benefits," Towers said.

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Source: The Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/dental-benefits-underused.aspx?utm_source=SHRM%20Tuesday%20-%20PublishThis_HRDaily_7.18.16%20(61)&utm_medium=email&utm_content=July%2018%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29816718&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1082268634&spReportId=MTA4MjI2ODYzNAS2

By Lisa Nagele-Piazza, SHRM-SCP, J.D. Jun 28, 2017

Navigating California's final pay laws can be tricky, and failing to promptly deliver all wages due to employees can lead to significant penalties. That's why HR professionals should make sure they understand the various requirements under state law.

Employers that don't comply with final pay requirements will owe the employee waiting-time penalties equal to a day of pay for each day the employer is late—up to a maximum of 30 days.

"That can be a lot of money," said Jason Barsanti, an attorney with Cozen O'Connor in San Diego. As an example, he said, if an employee was earning $15 an hour and working eight-hour days, that's nearly $4,000 in penalties.

This situation can be avoided if the employer knows the rules. Additionally, Barsanti said, making employees feel like they are respected, even during the separation process, can reduce the chance of a lawsuit. "You should do everything you can to treat people fairly—be polite, shake their hand—let them know they are valued."

[SHRM members-only toolkit: Managing Involuntary Employment Termination in California]

Prompt Payment

California employees who are fired need to get their final paychecks immediately. If an employee quits, however, the time requirement depends on how much notice the worker provided:

• An employee who gives at least 72 hours of notice must receive a final paycheck at the time of separation.
  
• An employee who doesn't give notice must receive the final paycheck within 72 hours.
  

Employers should always err on the side of caution, Barsanti said, noting that issues with delivering a timely final paycheck typically arise when an employee is discharged in a hurry.

If the termination must happen rapidly—for reasons like theft or violence—HR professionals should consult their legal department and ask what may be the best course of action, he said. The legal department may have an answer or may want to call outside counsel.

In some situations, employers may want to offer a little extra severance pay to the worker in exchange for a waiver of certain legal claims, Barsanti noted.

If an employer needs an extra day to get the paycheck cut, it should also give the employee a day's worth of waiting time penalties when the check is delivered. 

Reporting-Time Pay

California law requires employers to provide reporting-time pay in certain situations, even if an employee isn't put to work. If a nonexempt employee is sent home before working at least half of a regularly scheduled shift, the employer typically must pay the employee for half of the shift (but for no less than two hours and no more than four hours). This rule doesn't apply in some emergency situations—for example, if there was an earthquake or a public utilities failure and employees were sent home.

"If the employee is scheduled for eight hours, you must pay four hours," explained Katherine Catlos, an attorney with Kaufman Dolowich & Voluck in San Francisco.

So, if an employee shows up for a regularly scheduled eight-hour shift and is immediately brought into an exit interview, the final paycheck needs to include four hours of reporting-time pay for that day.

"If you call an employee in on a nonscheduled day, you should add two hours of reporting-time pay to the final check," Barsanti said.

Payroll Deductions

Employers must be careful about what deductions they make from workers' paychecks throughout the entire employment relationship—including at the time of separation. The California Department of Industrial Relations says employers may make payroll deductions that are:

• Required of the employer by federal or state law, such as income taxes or garnishments.
  
• Expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate or deduction from the wage paid to the employee.
  
• Authorized by a collective bargaining or wage agreement, specifically to cover health and welfare or pension payments.
  

Employers can't make wage deductions for a cash shortage, a breakage or loss of company property that resulted from an employee's mistake, an accident, or because of simple negligence (as opposed to a willful or grossly negligent act). These are part of the employer's cost of doing business.

An employee can be disciplined or fired for such mistakes, but employers will get into trouble if they deduct the cost from wages.

Catlos said employers shouldn't deduct money from a worker's final paycheck for the cost of unreturned uniforms, laptops or other company property.  "Instead, the employer must file in small claims court."

If the employer provided a worker with a loan or vacation advance, the employer can't deduct the owed amounts from an employee's final wages, said Steve Hernández, an attorney with Barnes & Thornburg in Los Angeles. "The employer would need to recover those amounts from the employee separately from the final paycheck."

Employers must also ensure that all accrued but unused vacation time or paid time off is included in the final paycheck and is calculated at the employee's final rate of pay.

Hernández noted that commissions, bonuses or other wages—like severance pay—that are agreed upon in an employment agreement or other policy could also be considered wages earned. 

Hand-Delivered?

California law says that an "employee who quits must be paid at the office or agency of the employer in the county where the employee worked." In some circumstances, however, employees who quit can request that their paycheck be delivered by mail or direct deposit.

If an employee is fired, the final payment must be made at "the place of termination."

In most situations, the employee's separation will happen at the company's office, so these rules won't present much of an issue, Barsanti said. But there are situations—particularly for remote workers in California—where the termination may need to be done over the phone.

In those cases, Catlos said, employers can deliver the final paycheck via messenger.

They could also send the check by overnight delivery. "The cost of overnight mail is worth the ability to track and confirm delivery of the final paycheck," Hernández said.

Barsanti and Hernández both recommend adding an additional day of pay to cover waiting-time penalties if the check is sent by overnight mail on the day of the termination or if there is any doubt that the final paycheck will be delivered on time.

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Source: The Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/California-Employers-Final-Pay-Rules.aspx?utm_source=SHRM%20PublishThis_CaliforniaHR_7.18.16%20(18)&utm_medium=email&utm_content=July%2011%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29730040&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1081403470&spReportId=MTA4MTQwMzQ3MAS2

Other metrics challenge shareholder return for determining incentive rewards

By Stephen Miller, CEBS Jul 10, 2017

The value of CEO pay packages has steadily risen as companies shift away from discretionary bonuses and stock options toward more-rigorous approaches to pay for performance, new research finds.

CEO Pay Trends 2017, the most recent report by Equilar, a Redwood City, Calif.-based compensation research firm, looks at CEO pay at Equilar 500 companies—the 500 largest U.S.-based publicly traded companies measured by revenue—from 2011 through 2016. Top executive pay at these corporations rose an average of 6.1 percent from 2015 to 2016 to a median $11 million—the biggest annual gain since 2013, the researchers found.

"Median CEO pay packages consistently climbed each year over the five-year study period examined for this report," said Matthew Goforth, Equilar research manager and lead author of the study. "At the same time, boards continue to tweak incentive pay to align CEO interests with both company strategy and shareholder returns over the long term."

Over the study period, a growing number of companies started granting performance-based long-term incentives (LTI) to their chief executives, reaching 81.5 percent of Equilar 500 companies in 2016. Meanwhile, the prevalence of CEOs receiving time-based stock options fell to a five-year low of 50 percent in 2016.

Performance-based incentives are awarded on the achievement of predetermined performance goals, whereas restricted stock typically vests over a certain period of time. Stock options mix tenure and performance incentives, in that they allow the options holder to buy company shares at a predetermined price after a specified vesting period; if the stock goes up in value, the options holder can buy it at a discount.

But increasingly active shareholder groups have opposed using stock options as a long-term incentive, viewing them as too loosely linked to an executive's performance since macroeconomic trends can lift stock prices across the board, irrespective of an executive's leadership.

"There is no doubt that proxy advisors and large institutional investors have influenced pay design, particularly with respect to the growing use of performance-based equity plans and a continued shift away from stock options, in both prevalence of usage and weight," said Virginia Rhodes, lead consultant at the Atlanta office of Meridian Compensation Partners, a pay consultancy. "These factors, coupled with the expense associated with options, have many companies opting for time-based restricted stock to provide the retentive element in their programs, as needed."

Among other key findings from the report:

• The health care sector reported the largest CEO pay packages in 2016 at a median $13.3 million.
  
  
• Median value of stock awards climbed more than 9 percent between 2015 and 2016, and 43 percent since 2012.
  
  
• On average, CEOs received about 32 percent of total reported compensation in cash, 65 percent in equity and 3 percent in other compensation in 2016.
  
  
• Nearly 55 percent of reported LTI mix was performance-based in 2016 at the median, up from 49.9 percent in 2012.
  

Companies that filed a proxy statement or disclosed compensation information in an amended 10-K filing by May 1, 2017, were included in the fiscal 2016 year. Only CEOs who served at least one full fiscal year were included in the sample size.

Executive Performance Metrics

Another recent Equilar report shows that relative total shareholder return (rTSR) continues to be the most popular measurement tying CEO pay to performance in S&P 500 companies—a sampling of 500 of the largest U.S. companies across a range of industries.

This metric measures the relative performance of different companies' stocks and shares over time, combining share price appreciation and dividends paid to shareholders.

However, Executive Long-Term Incentive Plans: Pay for Performance Trends shows that return on capital (ROC) and earnings per share (EPS) saw a bump while rTSR flattened in fiscal 2015—the most recent year for which comprehensive pay data is available for this group of companies.

"Both compensation committees and shareholders are looking for the best links between pay and performance," Goforth said. "Though rTSR helps balance executive pay with shareholder returns, profits and return on company investments have emerged as consensus picks for tying day-to-day operations to long-term value creation."

"Many companies are challenged with defining how to measure their success, and who they will measure themselves against, as peer groups are not always easily defined based solely on size or industry sector," added Craig Rubino, director of corporate services for E*Trade Financial Corporate Services in Atlanta. "Similarly, the time period for tracking rTSR can produce varying results, which creates additional complexities to consider."

For these reasons, companies often include more than one metric, "allowing them to also track performance based on goals like internal restructuring, product growth or other business line measurements," he said.

Among other performance metric trends cited in the report:

• Only ROC consistently increased as a CEO-pay metric every year over the study period, rising from 26.1 percent in 2011 to 30.6 percent in 2015.
  
  
• While EPS declined each year between 2011 and 2014, use of this metric in 2015 increased from 27.3 percent of companies to 29.2 percent, though still below its high in 2011 of 34.6 percent.
  

When ROC or EPS were included as a performance award metric, they were most commonly weighted 100 percent—in other words, receipt of the award was fully dependent on meeting goals tied to those particular measurements.

"Most compensation committees want to design clear and understandable incentives, so linking one or two performance metrics to a single award is common," Goforth said.

Public companies in the U.S. will be required to disclose the ratio of CEO pay to median employee pay in their 2018 proxy statements—reporting on fiscal year 2017—and many are already working through the calculations involved.

Higher CFO Pay Spurred by Bigger Bonuses and LTI Grants Median total direct compensation for chief financial officers (CFOs) at 80 companies in the S&P 500 grew to $4 million in 2016, a new study by HR consultancy Mercer shows. Median long-term incentives (LTIs) increased to $2.2 million and bonuses were paid out at 119 percent of target in 2016, a notable increase over payouts in 2015 of 108 percent. Base salary constitutes a smaller percentage of CFO pay while LTIs account for more. "It's not just the CEO whose compensation is being weighted towards variable elements," said Ted Jarvis, Mercer's global director of executive rewards data, research and publications. "All members of the C-suite have basically followed the same trajectory, and we don't see any indication that this trend will reverse." Base salary accounted for 21 percent of total direct compensation for CFOs in 2012; by 2016, it had shrunk to 18 percent. Over the same time period, LTIs increased from 57 percent to 59 percent of total pay. The CFO to CEO pay ratio, which has hovered around one-third over the past few years, did not change in 2016. However, the range is wide. At the 10th percentile, CFOs earned 24 percent of the CEO's compensation and tended to be more heavily weighted toward base salary. At the 90th percentile, they earned 47 percent of the CEO's compensation. "We suspect some of this differential may be related to industry or corporate size," Jarvis said.

Source: The Society for Human Resource Management (SHRM) 

https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/CEO-pay-packages.aspx?utm_source=SHRM%20Monday%20-%20PublishThis_HRDaily_7.18.16%20(50)&utm_medium=email&utm_content=July%2010%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29707324&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1081222223&spReportId=MTA4MTIyMjIyMwS2

Meanwhile, men who won’t disclose compensation earn more than men who do

By Dana Wilkie Jun 29, 2017

Women who are asked about their salary history during a job interview and who decline to reveal it tend to earn 1.8 percent less on average than women who do disclose their compensation, according to a new survey by PayScale.

And if men decline to disclose their earnings? They tend to get paid 1.2 percent more on average than men who reveal their compensation.   

"What we expected was that revealing salary history would have a negative impact for women, but we didn't find that. Instead, refusing had a negative impact," said Lydia Frank, vice president of content strategy at PayScale, which provides compensation data and software. "There's a lot of research out there around unconscious bias that shows that we expect women to be cooperative and collaborative, so when a woman refuses to answer that question, it could rub people the wrong way."

At least six states or cities have banned—or are considering banning—employers from asking salary history questions: Delaware (effective December 2017); Massachusetts (effective January 2018); New York City (effective October 2017); Oregon (effective January 2024); Philadelphia (effective May 2017, but delayed pending litigation); and Puerto Rico (effective March 2017). California is considering similar legislation.

By forbidding the question in the first place, women won't be put in the position of having to refuse to answer, Frank said.

"That's absolutely the advice we're giving to employers: Don't ask the question and put candidates in an awkward position of having to decide whether to answer. It's easy enough to switch to 'salary expectations,' and that's really what the employer and candidate should be talking about anyway—the market rate for the position, not an individual's salary history. If salary history does manage to influence the offer, [that could] lead to internal pay inequities and employee turnover."

Kris Meade, a partner and chair of the Labor and Employment practice at Crowell & Moring in Washington, D.C., said she's not surprised by the finding.

"It may provide another piece to the pay equity puzzle," Meade said. "The research shows that women negotiate pay less frequently than men. As a corollary to that, I would expect that women who do disclose, and then negotiate, salary fare better than women who either fail to disclose or actually disclose but don't negotiate. Being prepared to negotiate pay is the key, whether one discloses prior pay or not."

Joe Schmitt, a shareholder with Nilan Johnson Lewis in Minneapolis, said that although there is social science data suggesting that women can be held to different standards than men when it comes to pay, there is also social science research suggesting that forcing a discussion about compensation is actually helpful to women.

"The suggestion that compensation is negotiable tends to reduce disparities in starting salaries between men and women, because it makes women more likely to negotiate," he said.  "I believe Payscale's findings reflect that women who disclose their compensation are more likely to negotiate, which in turn is more likely to reduce pay disparities."

Job Group, Job Title, Industry and Age Influence Candidate Responses

Between April and June, PayScale interviewed 15,413 respondents who had pursued jobs. The survey asked the following question: At any point in the interview process, did you disclose your pay at previous jobs?

The available responses were:

1. No, and they did not ask.
   
2. No, but they asked.
   
3. Yes, they asked about my salary history.
   
4. Yes, I volunteered information about my salary history.
   
5. I do not recall.
   

PayScale analyzed the responses by industry, job title, job group, job level, gender, age and income bracket.

When it came to job groups, the most likely candidates to disclose salary history during an interview were those applying for positions in human resources (44 percent), marketing and advertising (43 percent), and accounting and finance (40 percent), the survey found.

"With HR, if you've been on the other side of the table discussing compensation with candidates, where salary history is something you asked of candidates, being asked yourself might feel pretty typical," Frank said.

The job candidates least likely to be asked about their salaries were those applying for jobs in values-driven industries such as social services (67 percent weren't asked) and nonprofits and education (61 percent).

When it came to job level, those most likely to be asked about their salary history—but also among the least likely to disclose it—were people applying for C-suite jobs. Forty percent said they were asked about their compensation (compared, for instance, with 32 percent of individual contributors who were asked), while 26 percent refused to answer the question (compared with 9 percent of individual contributors). Moreover, when these job candidates did refuse to say what they earned, they tended to earn more than those who revealed their salaries.

"When it comes to higher-paying positions, an employer doesn't want to waste anyone's time—theirs or yours," Frank said. "So making sure you really understand salary expectations for those roles makes a ton of sense."

As for executive-level candidates' tendency to sidestep the question, "that has to do with confidence," she said.

"If you know your skills are sought after and you're at a level in your career where you're in a highly paid role, you probably know your value and are more confident in saying, 'Hey I don't really want to talk about my salary; I want to talk about the position and what the role is worth.' "

In addition, compensation for C-suite employees often encompasses more than base salary and standard benefits—such as a company car, for instance, or equity with the company. Employers may want to know if they can match that compensation before they seriously pursue the candidate, said Elizabeth Washko, co-chair of the Pay Equity Practice Group at Ogletree Deakins in Nashville, Tenn.

"A candidate with a compensation package that the employer cannot possibly match may not be worth pursuing," she said.

When it came to industry, those most likely to be asked about their salaries were people applying for jobs in finance and insurance (45 percent).

"Finance is a pretty compensation-driven and results-driven field," Frank said. "These are people who typically earn commissions and bonuses that [reflect performance]. Knowing a candidate's past [compensation] package helps to determine how high of a performer they are."

Meanwhile, 49 percent of people applying for such jobs revealed their compensation.

"If you're a high-performer, you want to brag about that, right?" Frank said. "You want to make it clear that you're valuable."

The older the survey respondent, the more likely they were to refuse to disclose what they earned: 28 percent of Baby Boomers refused to disclose their salary histories when asked, 22 percent of members of Generation X refused and 18 percent of Millennials refused.

"Think back on your own career," Frank said. "Essentially, [the interview involves] a power dynamic. The employer's asking you a question and you want to please and you want a job there, so as a young person you don't even question whether you're supposed to answer or not. It's not until over time, after you feel this may have negatively impacted you, do you even think to question whether to reveal" your compensation.

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/banning-salary-questions.aspx

Balance flexibility and fairness when employees ask to tailor benefits to their personal needs

By Stephen Miller, CEBS Jun 23, 2017

Employees often try to negotiate with their employers arrangements that take into account their individual needs—such as asking for more-flexible work hours, a reduced workload, more pay or special training. These arrangements—known as "idiosyncratic deals," or "i-deals"—are sometimes in the interest of both the employee and employer, especially if such deals make employees more motivated and committed to their jobs.

But they also can create jealousy, envy and conflict in the workplace, a recent study found.

The research, published in the January 2017 issue of the Journal of Business Ethics, examined how co-workers view i-deals and looked at practical considerations for managers and HR professionals. The study was conducted in Belgium with responses from nearly 2,000 employees.

"More and more people want to be treated as individuals with their own special needs, desires and expectations," said study co-author Elise Marescaux, an assistant professor in human resources management at IÉSEG School of Management in Lille, France. "But this can create jealousy, envy and conflict in the workplace."

In general, i-deals involving financial compensation were viewed to be the most unfair, followed by flexible hours and reduced workloads, the study found.

The researchers said co-workers are more likely to understand when a company grants nonfinancial benefits because of an employee's personal needs (such as a single parent who has to pick up her children at a certain hour, or an employee who needs to take care of his sick wife). Justifying financial rewards, however, is more difficult, they noted.

The researchers were surprised to find that a reduced workload was considered the most fair benefit—more so than flexible hours—even though this would presumably mean more work for the team. A possible explanation, they suggested, is that reduced workloads are often granted to address serious health, stress or caregiving issues, while flexible hours are often requested to accommodate routine schedule conflicts or an employee's preference to start and leave earlier or to start and leave later.

A Fair—and Transparent—Workplace

"What's behind the results is that it's very important why a person gets an i-deal," Marescaux said. "If employees understand why it's necessary to give someone a specific deal, then they will be much more understanding."

She warned against trying to keep special arrangements under wraps, especially since i-deal benefits such as a flexible schedule or special training would soon become obvious to fellow employees. "Secrets don't stay secret," Marescaux said. As evidence, she cited the case of a manager who privately—and falsely—told various team members that they were earning more than their co-workers. "It blew up in his face. Everyone found out … and it led to huge distrust toward the manager."

Practical Considerations

A manager who offers an employee a special benefit should consider the effect on that person's co-workers, especially when team members depend on one another to get their work done, Marescaux advised.

"When working in a team environment, giving people special deals is going to be a struggle," she said. One suggestion for managers is to cede decision-making powers about special arrangements—such as flexible hours or a reduced workload—to the group. "If the team gets to decide, then the team will consider it more fair because they made the decision," she noted. In doing so, however, "you lose your power as a manager, which is a tricky thing."

Barring allowing the group to make the decision, Marescaux recommended that managers:

• Communicate to the team when benefit accommodations are being made.
  
  
• Justify special arrangements as objectively as possible.
  
  
• Find solutions to practical problems that the deal might create, such as coordination issues among co-workers.
  
  

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/special-benefit-arrangements.aspx?utm_source=SHRM%20Friday%20-%20PublishThis_HRDaily_7.18.16%20(52)&utm_medium=email&utm_content=June%2023%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29507344&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1062952067&spReportId=MTA2Mjk1MjA2NwS2