Creating A Compensation System

All employees analyze their environment and strive to be recognized and rewarded for their hard work and dedication they put into the company, in a word they are seeking justice. Justice can be defined as a person receiving what they feel they are entitled to and if they do not receive what they deserve, the situation may boarder on injustice. Unfortunately in today’s society justice and appreciation are not given out to all those deserving (Pinder, 1998). Within the Equity theory there are three justice theories. The first of which is distributive justice, this touches on if the referent feels that the outputs are fair that are given to the employees. This comes into play

The Fair Labor Standards Act has been amended many times and is virtually an ever-changing law, however, it does not cover all employees. There are several classes of “exempt” employees, including salaried employees in the executive/managerial, administrative, and professional areas. Outside salespeople are also considered exempt. One of the issues facing companies today is knowing which employees are exempt and which are non-exempt. There are tests to determine if an employee is exempt. In 2004 the tests changed to a standard test, which is whether or not the employee’s salary is $455/week or greater and the duties test, which allows for exempt status if more than 50% of the work performed by an individual is “exempt work.” (Pass and Broadwater) Exempt employees do not receive overtime pay, which can be a substantial cost savings to a company. My previous employer required that an exempt manager close the center each night even though we had non-exempt team leads who acted as managers in most capacities. The reason was to avoid overtime costs.

Rather, Equity, and the sense of fairness which commonly underpins motivation, is dependent on the comparison a person makes between his or her reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation”(Balancing Employee Inputs and Outputs).

What is the Fair Labor Standards Act? The Fair Labor Standards Act is better known as the FLSA. The FLSA established a maximum hour work week, a minimum wage pay, overtime pay, and child labor laws. Many people are aware of the basic FLSA parts but big changes have come.

In May 2016, President Obama and Secretary Perez announced The Fair Labor Standards Act, intended to require employers to compensate employees for overtime. The FLSA was designed to extend overtime protections to

For potential employees in the United States, one of the first things people want to know is what how much they are going to be paid. Minimum wage has been and continues be a very important topic for workers. The Fair Labor Standards Act was enacted in 1938 to protect our workers during the Great Depression under Franklin Roosevelt. According to the book, Legal Environment of Business: Online Commerce, Business Ethics, and Global Issues, “the Fair Labor Standards Act establishes a minimum wage and overtime pay requirements for workers (Cheeseman, 2016, p.454).”

The Fair Labor Standards Act was drafted by Senator Hugo Black of Alabama and signed into law in June 1938 (US History, n.d.). Basically this act emphasized that there be a mandated 40 hour work week with a starting wage of at least 25 cents per hour with the strict restrictions for the use of child labor. The fair labor standard act was established to ensure that employees are given a minimum wage which was set forth for states due to overtime, child labor laws, and overtime for employees. This gives employees the opportunity to work for wages which are not below the standards which have been established by Congress.

If you own a business that has employees (other than yourself), you may, at some point, need the help of a Fair Labor Standards attorney. The Fair Labor Standards Act (FLSA), enacted in 1938, established minimum wage, overtime pay, recordkeeping and child labor standards affecting full- and part-time workers in both the private and public sectors. As an employer, you must adhere to the provisions of the FLSA or face these legal or criminal actions that only an experienced Fair Labor Standards attorney can assist you with:

The Fair Labor Standards Act of 1938, as amended is also referred to as "the Act" or "FLSA". The Act provides for minimum standards for both wages and overtime entitlement, and spells out administrative procedures by which covered work time must be compensated. FLSA also include provisions related to child labor, equal pay, and portal-to-portal activities. A general overview of FLSA is that it establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local government. In 1974 the Fair Labor Standards Act began applying to employees of the United States Federal Government. ( para.1, 2,”

Fair Labor Standards Act is a law that was established June 25, 1938 that made employers legally required to pay workers overtime for certain jobs. According to Department of Labor, “the set minimum, in 1938, hourly wage was at .25 cents at the maximum work week at 44 hours, which is $4.00 today. Now raising minimum wage has its positives and negatives. A few that caught my attention are economic growth.

There are a number of employment practices which ‘Fair Labor Standard Act” does not regulate. They are vacation, holiday, severance, or sick pay; meal or rest periods, holidays off, or vacations; premium pay for weekend or holiday work; pay raises or fringe benefits; or a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees. The standard work week in 1938 was reduced to 44 hours per week, and if employees were to work over that they would be paid over time at a rate of their wages plus one-half wages for the additional time worked. By 1940 the standard work week was reduced to 40 hours per week (www.dol.gov/dol/oasam/programs/history/flsa1938.htm). Despite this law in 2006 a class action law suit was brought against Wal-Mart for not paying its employees for their overtime and forcing them to work through their breaks. Wal-Mart lost the law suit and the workers won $78.4 million (Worth 2008 p 12).

The Fair Labor Standards Act, or FLSA, was initiated in 1938 to inaugurate minimum wage and overtime pay, documentation and worker registration, and child labor standards. It currently states that all employees are authorized to a minimum wage of no less than $7.25 per hour. It also explains that overtime pay is to not be less than one and a half times the regular pay after the 40 hours of required work per week. There is no restriction on the amount of hours that employees 16 years or older are able to work in a week and does not necessitate overtime pay for work on the weekends, holidays, or established days of break, except if overtime is worked on those days.

President Franklin D. Roosevelt enacted the FLSA on June 25, 1938. It was signed in as a federal labor law to provide criteria for governing general labor practices such as overtime, minimum wages, child labor protections and equal pay. The Fair Labor Standards Act is a long and extensive document in and of itself. It defines many exceptions and exemptions. For purposes of this paper the portion of the FLSA that will be concentrated on is the difference between exempt and non-exempt employees.

Fairness Principle. It is based on the belief that stakeholders who have a vested interest in the firm should be treated fairly. There are four types of fairness: reciprocal fairness, distributive fairness, fair competition and procedural fairness. Reciprocal fairness addresses the issues of treating another party fairly and having the other party treat the firm fairly. Distributive fairness is based on the assumption that the allocation of finite resources within the firm will be distributed fairly based on maximizing the benefits of those allocations. Fair competition focuses on the fair treatment given by the firm as it interacts with its existing and potential competitors, Procedural fairness deals with ensuring that parties that interact with the firm are treated fairly from a due process perspective.

The organization typically not focused on fairness (Walker, 2012). This is due to many authors have studied the relationship between leader`s fairness and the factor such as the motivation and satisfaction of the employees, the trust in the leader, organization citizenship behavior and employee commitment to the firm but still there is no study that focused on the relationship between human resource practices and fairness. The aim of the study is to measure the relationship between human resource practices that involves employees’ compensation and benefit, performance appraisal, career development and employees’ perception of fairness. This study is also to ensure whether the implementation of human resource practices can affect employees’ perception of fairness in the organization. Yet, there are weaknesses still exist in determine the employees’ compensation and benefit, performance appraisal, and career development in the organization which directly can lead to the expectation of employees toward the fairness of the organization.