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Designing and Implementing Compensation Plans

Designing and Implementing Compensation Plans. John A. McCreary, Jr. Babst Calland Clements & Zomnir P.C. What Do You Intend to Accomplish Through the Creation of a Compensation Program?. Retention and recruitment (competition) “Get politics out of the paycheck”

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Designing and Implementing Compensation Plans

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  1. Designing and Implementing Compensation Plans John A. McCreary, Jr. Babst Calland Clements & Zomnir P.C.

  2. What Do You Intend to Accomplish Through the Creation of a Compensation Program? • Retention and recruitment (competition) • “Get politics out of the paycheck” • Create incentives for performance • Internal equity

  3. Job Descriptions:A Primer

  4. Job Descriptions: Many Purposes • Establish performance requirements • Assign titles, pay levels to jobs • Recruit for vacancies • Train employees • Make decisions on job restructuring • Explore reasonable accommodation and other legal requirements

  5. Job Descriptions: What to say? • Who? (Who does this person report to) • What? (What is the work) • Where? (Location/Department) • When? (Or how often) • Why? (Purpose or impact of the work) • How? (it is accomplished)

  6. Job Descriptions • Negotiability? • Establishment of method to bring changed conditions to attention of management

  7. Job Descriptions • Sample Reclassification Procedure AGREEMENT ON NEW JOB DESCRIPTION AND CLASSIFICATION PROGRAM (1) Employees who feel that their position has been substantially changed may request reclassification from the Director, Employee Relations. (2) The Director shall cause a Position Description Questionnaire (PDQ) to be completed for the position in question. (3) The PDQ shall be submitted to DMG/Archer for evaluation and rating in accordance with its usual methodology. (4) If DMG determines that the position should be reclassified, the County shall implement the recommendation. If DMG determines that the position is properly classified, the employee may grieve the determination. At all times the employee and/or Union shall bear the burden of demonstrating the inaccuracy of DMG’s evaluation.

  8. Job Descriptions and the Law The ADA • The ADA focuses on the “essential functions of the job,” so employers should ensure that all essential functions are in the job descriptions • “Essential Functions” are the fundamental job duties of the employment position the individual with a disability holds or desires. See 29 C.F.R. 1630.2(n)(1). • Essential job features that are not usually called duties should not be forgotten. This includes physical demands such as: strength, balance, walking/running, kneeling, crouching, reaching, talking, hearing, seeing, smelling.

  9. Job Descriptions and the Law The ADA • Physical effort that job requires is important but remember that different people may accomplish the same functions in quite different, but acceptable ways. • Focus on essential functions of job and what they require and not simply the way they are currently or customarily performed. Alternative manners or means of accomplishment should be considered. PITFALLS: • Avoid language excluding qualified individuals with disabilities.

  10. Job Descriptions and the EEOC • Racial requirements are never lawful. • Requirements based on gender, national origin, religion or age can only be used in limited circumstances. • Job requirements based on these protected characteristics are lawful only when an employer can demonstrate that they are bona fide occupational qualifications ("BFOQs") reasonably necessary to the normal operation of business. 42 U.S.C. § 2000e-2(e)(1); 29 U.S.C. § 623(f)(1). • All or substantially all of the individuals excluded from the requirement must be unable to safely and effectively perform the job duties which are reasonably necessary to the safe and efficient operation of the business. SeeUAW v. Johnson Controls, 111 S.Ct. 1196, 1204-05 (1991).

  11. Job Descriptions and the EEOC • Do job requirements, while neutral or evenly applied, indirectly impact employees based on race, sex, color, national origin or religion? If so, assess whether it is truly job-related, consistent with business necessity and the least discriminatory alternative available. 42 U.S.C. § 2000e-2(k)(1)(A)-(C). This means it should have a proven relationship to the employees’ performance on the job. EEOC Compliance Manual § 604.7(b). • Educational requirements are important for certain jobs. Graduation from medical school is required to practice medicine. However, employers often impose educational requirements out of their own sense of desirable qualifications. Such requirements may run afoul of Title VII if they have a disparate impact and exceed what is needed to perform the job. • A requirement or duty is a business necessity when it is needed for the “safe and efficient operation of the business.”

  12. Tips and Practice Pointers • Let employees describe their own jobs • Indicate the time spent on each function • This will help indicate which functions truly are essential and help applicants understand the position • Describe the frequency, duration and intensity of functions • Establishes the level of the work demand • Describe the customary manner of performance • If there are non-essential job functions, list separately • Use language that stresses the nature and importance of the job functions using non-prejudicial language

  13. Tips and Practice Pointers • Keep job descriptions current - can be useful in litigation • Consider the format - more generic/general v. specific/detailed • Prepare job descriptions with care - clear, accurate and non-prejudicial language • Use disclaimers but don’t rely on them. They are simply to reaffirm that job descriptions cannot be all inclusive • “Other assignments as may be directed from time to time by management.” • “This job description reflects management’s assignment of essential functions, it does not prescribe or restrict the tasks that may be assigned.”

  14. Implementation of Compensation Program • Union participation – it is much easier to get union to buy into concept/process if it understands how the program was developed

  15. Implementation • Negotiation Issues • Buy into concept • Buy into methodology • Commitment to program • Cost • DMG example • 1.3% or $130,000 to pay grade minimum • 6.5% or $645,000 to mid range

  16. Implementation • Negotiation Issues • Placement on scales • Where? • How? • Movement on scale • How? • When? • Topping out – what happens next?

  17. Implementation • Adjustments • How frequently? • Anomalies • “Missing the Market” – what do you do when a job is drastically overvalued or undervalued in your current system? • Benefits factor – should pay rate of job be adjusted to reflect differences in value of fringe benefits? • Flexibility

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