EMPLOYMENT COMPENSATION 1

Running head: EMPLOYMENT COMPENSATION 1

EMPLOYMENT COMPENSATION 6

Introduction

Jane Swift is becoming frustrated with her job as a Shift Leader at Jones Department Store. She’s worked there for six months and the full-time job has turned into more than full-time. Several Associates have left the store and as a result, the past several weeks she has worked 45-50 hours each week. She doesn’t mind working the extra hours; she is just frustrated because she is not getting paid overtime pay.

She asked the Store Manager, Amy Kostner, about the overtime pay she was due. Amy informed Jane that Shift Leaders are part of the management team and they are classified as Exempt under the Fair Labor Standards Act. The store is not required to pay Exempt workers overtime pay.

Jane agrees that she is part of the management team. As a Shift Leader, Jane runs the floor when she is on duty. One of the Assistant Managers sets the daily schedule of Associates each week, but Jane and other Shift Leaders assign the Associates to various work areas as needed. Depending on store traffic, Associates need to be moved from stocking shelves and cleaning to cashiering or assisting customers. When not working on such management responsibilities, the Shift Leaders generally assume the duties of Associates by assisting customers and cashiering. Jane reports that she typically spends only a little more than half of her time performing Associate duties.

Shift leaders are also involved in managerial decisions. For example, they often sit in on employment interviews, and typically are aware of employee terminations before the employee is fired. They also give feedback about the Associates to the Assistant Managers who write the annual performance appraisals.

Just like a manager, Jane makes a lot of decisions during the course of her shift each day. If there is a dispute on a sale price, Jane searches the weekly sales flyer to determine the correct price. If a customer has a return, Jane reviews the transaction and initials it before the cashier can give a refund. However, she does not have complete autonomy in making decisions. For example, if a return is greater than $50.00, an Assistant Manager or the Store Manager needs to approve the refund.

But even though she agrees that she is part of the management team, Jane isn’t satisfied with Amy’s answer on her question about pay. If she isn’t eligible for overtime pay, she thinks that she should be paid more. While she is paid at a higher rate than most of the Associates, she is not paid nearly as much as the Assistant Managers. A pay increase or overtime pay would at least make it worthwhile for her to put in the extra hours (Martocchio, 2015).

 

1. Why did Amy classify the shift leaders as Exempt? Are there any advantages to Jones Department Store to having the shift leaders classified as Exempt?

Exempt refers to an employees’ status regarding the overtime pay provisions of the Fair Labor Standards Act of 1938 (FLSA). Administrative, professional, and executive employees are generally exempt from FLSA overtime and minimum wage provisions (Martocchio, 2015). It is only advantageous for an an employee to be characterized as exempt, if compensated well for his/her time on the job. In this scenario with Amy, it looks as if she hasn’t been thoroughly communicated with, concerning her job description and compensation. Supervisors and managers are held to a higher standard concerning his/her schedule and work responsibilities. However, most of the time, these employees are compensated at a higher rate than the average hourly employee. Jane is a shift leader, which seems to be some type of supervisor. While, she and the other shift leaders assume the duties of associates, when they are not performing managerial duties; most of the time the shift leaders act as managers. Jane is not happy about her exempt status, but apparently she agreed to this level of compensation upon her hiring. To answer question #1, Amy considers these shift leaders to be exempt, and rightfully so. Technically, because these shift leaders make managerial decisions, sit in on interviews, etc., they can be considered as exempt employees. There are definitely advantages for this company to have exempt employees such as these shift leaders. I currently serve as an (exempt) production manager at an organization and rarely do I just work forty hours a week. It is often times, upwards of 60 hours per week. Being exempt status, my manager can ask me to stay late or come in early at any time, as part of my responsibilities (Mathis & Jackson, 2011).

 

2. Do you think that the shift leaders are properly classified as Exempt? Why or why not?

I believe that these shift leaders are properly classified. Of course they don’t make the same level of compensation as managers, but they also don’t take on all the responsibilities that a manager does (Brady, 2008). This position should be thought of, as a type of managerial trainee job. The experience of being allowed to make some managerial decisions is of great importance and can lead to better opportunities in the future (Hernandez, 2009). While the responsibilities are greater for that shift leader, so are the opportunities for advancement (Zweig, 1991).

 

3. What are some factors that Amy should consider when determining if shift leaders are Exempt or Nonexempt?

Some factors that Amy should consider when determining if shift leaders are Exempt or Nonexempt are the responsibilities involved with the position. I’m not sure why many think that having greater responsibility should automatically involve overtime pay. First of all, we are not given adequate data concerning the incentive package that is given to these shift leaders, but often times they can involve bonuses, PTO, etc.

 

Again, the issue of greater responsibility is the criteria that makes for an exempt employee. The FLSA strictly states that an exempt employee is one who “directs the work of other employees or who has the authority to make recommendations affecting the status of those employees (FLSA). So, the exempt employee is one whom has greater responsibility.

 

 

 

References

 

Milkovich, George, Newman, Jerry, Gehart, & Barry. (2013). Compensation and benefits.

McGraw Hill.

Mathis, Robert L., Jackson, John H., Human Resource Management: Essential Perspectives,

CENGAGE, 2012, (page 254).

Brady, Robert, J., FLSA Wage and Hour Self Audit Guide, BLR, 2008, (page 44).

Hernandez, Robert., Strategic Human Resources Management in Health Services Organizations,

CENGAGE, page 245, (2009).

Zweig, Mark, C., Human Resources Management: The Complete Guidebook for Design Firms,
John Wiley and Sons, Inc., 1991, (page 210).
 
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