If I call colleagues in other companies to see what they are paying, am I creating a Sherman Anti-Trust Act violation? It’s likely, but there are safe harbor provisions, says Bottos, Vice President of Compensation at data provider Kenexa. Her suggestions came at a recent webinar sponsored by the company.
What’s the Practice in the Field?
Attendees at the webinar were divided on the issue of contacting peers—59 percent do not, while 41 percent do. Bottos doesn’t recommend the practice.
The Sherman Anti-Trust Act was passed in 1890. It prohibits price-fixing. In 1982, a Boston survey group was found to be price-fixing salaries. It wasn’t a survey as we think of it today. These companies got together and asked themselves how much a secretary should make—and then paid the agreed amount.
Eventually, in the early 1990’s, survey safe harbor guidelines were developed. To fall under the safe harbor,
- The survey must be conducted by a third party. If you are part of a local comp or HR group, you must have third party do your survey, Bottos says.
- Data must be at least 3 months old, so no one’s using real-time data.
- Each disseminated statistic must have five companies reporting data.
- You should not be able to identify an individual or a company.
- No individual company’s information can represent more than 25 percent of each disseminated statistic. (So no one’s controlling the market, Bottos says.)
Are class action lawyers peering at your pay practices? It’s likely, but you can keep them at bay by finding and eliminating any wage and hour violations yourself. Our editors recommend BLR’s easy-to-use FLSA Wage & Hour Self-Audit Guide. Try it for 30 days … on us.
“Every day I see surveys that don’t follow these guidelines,” Bottos says. Some groups she knows of have a lawyer on duty at meetings, to be sure there are no violations.
The good news is, there is a lot of data out there, so you should be able to get the information you need without going to your competitors, Bottos adds.
How Many Surveys Should You Use?
A poll of attendees at the webinar revealed that most companies represented use from 2 to 5 surveys. This figure is somewhat lower than it has been, Bottos says, but with the economy as it is, if companies aren’t giving increases, they’re not spending as much on surveys. In addition, there has been a consolidation in the survey market, she notes.
By the way, says Bottos, you can overcomplicate market pricing; don’t buy more survey data than you can manage.
Bottos has a word of caution, however, for those who use only one survey. Typically, this tends to be a local survey, and those seem to be the least stable. They often go away for a year, so you need a backup.
Of course, unfortunately, anti-trust violations aren’t the only legal issue you have to worry about. For example, how about your wage and hour practices? Could they be under review by the feds or, maybe worse, a class action attorney? Are your "independent contractors" independent? Are your "exempt employees" actually exempt? To ask the question another way, “How many FLSA violations exist at your workplace?”
Bottom Line: Audit Before THEY Do
"They," in this case, might be the feds, lawyers, or even bankers deciding you don’t get that loan because improperly classified workers represent a huge potential liability.
Experts say that it’s always better to do your own audit, and fix what needs fixing, before authorities do their audit. Most employers agree, but they get bogged down in how to start, and in the end, they do nothing. There are, however, aids to making FLSA self-auditing relatively easy.
What our editors strongly recommend is BLR’s FLSA Wage & Hour Self-Audit Guide. It is both effective and easy to use, and even won an award for those features. Here’s what customers like about it:
- Plain English. Drawing on 30 years of experience in creating plain-English compliance guides, our editors have translated the FLSA’s endless legalese into understandable terms.
- Step-by-step. The book begins with a clear narrative of what the FLSA is all about. That’s followed by a series of checklists that utilize a simple question-and-answer pattern about employee duties to find the appropriate classification.
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- Complete. Many self-audit programs focus on determining exempt/nonexempt status. BLR’s also adds checklists on your policies and procedures and includes questioning such practices as whether your break time and travel time are properly accounted for. Nothing falls through the cracks because the cracks are covered.
- Convenient. Our personal favorite feature: A list of common job titles marked “E” or “NE” for exempt/nonexempt status. It’s a huge work saver.
- Up to Date. If you are using an old self-auditing program, you could be in for trouble. Substantial revisions in the FLSA went into effect in 2004. Anything written before that date is hopelessly—and expensively—obsolete. BLR’s FLSA Wage & Hour Self-Audit Guide includes all the changes.
You can examine BLR’s FLSA Wage & Hour Self-Audit Guide for up to 30 days at no cost or obligation. Go here and we’ll be glad to arrange it.