Traditional and Compensation Bases for Pay Case Study

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compensation and traditional bases for pay.

Mary's Case

Background- Mary is what you could call a perfect employee. She holds the post of a supervisor in a construction company. She has been with the construction company for over 15 years. Mary is one of the few females in the male-dominated company and also the only female supervisor. All her male colleagues joined the company at least five years after her, but got promoted ahead of her. She is the only one among them with an advanced degree. Mary is in love with her job and has no complaints about the treatment she gets. One day, after a long and rough day at work, she decided to go out with some of her colleagues for dinner. While dining with her colleagues, some of her male colleagues got into a discussion about their salaries and other job openings that offer better paychecks. It suddenly dawned on Mary that she has been earning at least $5,000 less than all her male colleagues every year, in the last five years or more. After discussing with a number of her fellow supervisors, she realized that her earnings have been much less, without any tangible reason.

Can She File a Claim- During the time when petitioner Ledbetter was under the employment of the respondent Goodyear, salaried workers at her place of work were either given or denied a pay raise, depending on their performance evaluation. A questionnaire was submitted by Ledbetter to the EEOC-Equal Employment Opportunity Commission in March, 1998 and an official EEOC claim in July, 1998. While appealing, Goodyear contended that the alleged salary discrimination suit was time barred due to all salary decisions made prior to September 26, 1997, about 180 days before the filing of the EEOC questionnaire by Ledbetter- and that no other discriminatory act relating to her salary took place after that date (Ledbetter vs. Goodyear Tire and Rubber Co. 550 U.S. 618 (2007)).

The 11th Circuit reversed, owning to the fact that the Title VII pay discrimination suit couldn't depend on the alleged discrimination cases that took place prior to the last pay decision that influenced the worker's pay during the EEOC claim period, and drawing the conclusion that there was no sufficient evidence to show that Goodyear acted with a discriminatory intention in making the only two salary decisions within that period, denying raises between 1997-1998. Any individual that wishes to bring a Title VII lawsuit forward must begin by filing an EEOC claim within, in this case, 180 days after the occurrence of the alleged illegal employment practice. President Obama had, on January 29, 2009, signed into law, The Lilly Ledbetter Fair Play Act of 2009. The Act brought back the pre-Ledbetter stand of the EEOC that every paycheck that pays discriminatory salary is a wrong action under the national EEO statutes, irrespective of when the discrimination started. As pointed out in this Act, it identifies the reality of wage discrimination and brings back the bedrock principle of the American Law. Under this Act, any worker subjected to salary discrimination under Title VII of the 1964 Civil Rights Acts, the 1967 Employment Act and Age Discrimination, or the 1990 Disabilities Act, has 180 days (or 300) days of one of the following to file a claim (Notice Concerning the Lilly Ledbetter Fair Pay Act of 2009, n.d):

When discriminatory reward decisions or any other such discriminatory practice affecting reward is adopted

When the person affected is subjected to a discriminatory reward decision or any other such discriminatory practice that affects compensation.

When the affected person's reward is influenced by applying a discriminatory reward decision or other such discriminatory practice, which includes each time the person gets compensated based on the whole or part of such reward decision or other such practice.

Taking all these into consideration, Mary can come forward with a claim for gender discrimination, as a result of the passing of both acts, as seen in this case (Writer Thoughts, n.d). Nevertheless, if the acts were not passed, she would have a tougher time presenting her case. To a certain extent, the statute of limitations does apply here.

Seniority Pay System Compared to Merit Pay System

Seniority-based pay systems are pay systems in which the main basis for increase in pay is the worker's tenure.

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It should be observed that seniority-based pay systems can consider performance, while tenure remains the main factor. Some of the advantages of seniority-based pay systems are loyalty, retention and the stability of all workers, irrespective of their level of performances. Performance-based pay systems focus on performance as the main basis for increase in pay (Seniority vs. Performance-Based Pay Systems, n.d). Just like in seniority-based pay systems, several other factors, such as tenure, can be accounted for in a performance-based system. However, worker performance, though conceptualized by the company, is the main factor that determines pay raises. Performance-based pay systems can really lead to a climate in which every employee works hard to make sure he/she achieves the best possible performance. While this definitely sounds like a perfect option, there are a lot of pitfalls, like the potential for increased turnover rates as the standard and lower performing workers can be discouraged when they frequently fail to receive pay raises on merit.

When emphasizing on the pay system of any position in a company, the following should be put into consideration (Seniority vs. Performance-Based Pay Systems, n.d):

Decide the type of balance you would want to discover between a pay system that supports the high performers to continue, and one that the whole workforce finds inviting.

Don't forget that, while it sounds like a great idea, remove the low and average performers and keep only the high performers, this can give rise to a continuous cycle of high turnover and high costs. Training, mentoring, and coaching in other forms can be utilized in an attempt to increase the performance level of low and average performers.

Make sure that, irrespective of the pay system, a high communication level is obtainable to minimize the possibility of worker dissatisfaction and associated union organization.

Taking the position of the company into consideration, in relation to the workers, the merit pay system might really be the right way to go (Writer Thoughts, n.d).

External Compensation Forces

External wages can influence the internal wage structures, and wage levels and rates, of each firm. There are various means of sampling through which information on external wages can be obtained. These can be in the form of official reward surveys or unofficial information assembling. The aim of the information, and need for correctness, will determine the superiority of the scheme (Importance of External Factors in Wage Determination -- The Human Resources Social Network, n.d).

The samples of external wages are some of the inevitabilities obtained from the outside labor market and it is necessary that this information emanate from sources of the company's wage community. The rates of unemployment (both occupational and general) in the labor market affects the wages through their impacts on the company's ability to attract and keep workers. The product or service market is a vital source of information when it comes to the determination of pay rates and pay levels. This is as a result of the fact that the demand for labor is obtained from the demand that depends on the demand for both products and services created by labor. The company's product and services elasticity of demand places a lid on the highest pay level it can afford to pay workers.

Legislative factors are determined externally by every company, and influence the wages (Importance of External Factors in Wage Determination -- The Human Resources Social Network, n.d). Legislative influences include, but not limited to, labor standards, most importantly, minimum wages. Most employers depend on low skills that call for low wages (Minimum) by a temporary workforce. Any rise in the minimum wage influences both the rates paid to the workers and the wage level of the employer. Additionally, legislative requirements, like pay equity and employment equity, raise the administrative burden and cost incurred by the company. Such costs may influence a company's wage level and consequently, its wage rates......

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