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Compensation Basics

The Compensation Program at Wake Forest is designed to guide managers and supervisors with the flexibility to recognize individual performance by rewarding contributions to the university. The following information will provide a basic understanding of the foundation in which builds the program.

FLSA (Wages and the Fair Labor Standards Act Overview)

The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Covered non-exempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay will be at a rate of one and one-half times the regular rate of pay after 40 hours of work, in a workweek, have been completed.

Current regulations state that a person qualifies as a salaried worker (exempt from federal overtime pay requirements) if that person earns more than $455 a week ($23,660 annually) and meets the required standard duties test.  Generally this group includes executives, professional, and outside sales staff.

Market Data

To determine a position’s range in the market, Human Resources reviews the position description’s essential functions, required qualifications and knowledge, skills, and abilities to determine appropriate market data match in our compensation tool.

Human Resources works from the position description and with the department to understand the appropriate data cuts (industry, region, organization size, scope) from which to gather salary information. Certain positions like housekeepers and accountants are in good supply in the Winston-Salem area. Therefore, wage rates in the Winston-Salem area are used to determine competitive pay for those positions. On the other hand, certain other positions, like some of our campus life professionals, might have to come from further away, so statewide markets would be a better match.

Market Pay Example

Human Resources will review salary information across industries (higher education vs. corporate) to develop the right blend for market pricing. Comparatios (an individual’s salary as compared to the market average) are useful for identifying at a glance which pay rates are below the 25th percentile and above the 75th percentile, and which staff fall within the 50th percentile. Ideally, the majority of pay rates should have room to grow within the market ranges.

Wake Forest University’s target is for staff members to be positioned in their pay range as follows:

  • Staff who are new or developing in their position should be paid in the lower third of the range.
  • The opportunity, over time, is for staff at the fully proficient level to be at or near the midpoint of the pay range (middle third of the range). New staff who have a few years of relevant job experience may also be paid in this range. These staff members are considered average; average means they are a good, solid performer.
  • The opportunity, over time, is for staff who are fully experienced, high performers to be paid in the upper third of the range. These staff members are considered pivotal performers. Staff who have numerous years relevant job experience may also be paid in this range.

Example of Market Data

Positions Market Salary 25th Market Salary 50th Market Salary 75th
Job #1 $28,000 $35,000 $42,000
Job #2 $32,600 $41,000 $48,400
Job #3 $34,200 $38,000 $48,800
Overall Average $31,600 $38,000 $46,400

Example of Compa Ratio

Job Title Time in Role Current Salary Market Salary 25th Market Salary 50th Market Salary 75th % of Current Salary Compared to 50th
Wake Forest Job 5 yrs $40,000 $31,600 $38,000 $46,400 105%

 

Titling Guidelines

Titling Guidelines create a standard format to ensure leadership titles are used consistently across the University and facilitates cross-university comparisons to advance pay equity.

It is important to remember that titles:

  • are not a reward for incumbent performance or longevity, a replacement for appropriate pay, or a way to avoid FLSA.
  • should be representative of the accountabilities and responsibilities of the job, not the individual.
  • create consistency in institutional reporting to federal agencies.

Glossary of Compensation Terms

Americans with Disabilities Act: Prohibits employment discrimination against individuals with physical and mental disabilities. An employer cannot discriminate against a qualified individual because of disability in regard to hiring, discharging, compensating, promoting, and other terms, conditions, and privileges of employment.

Benchmarks: A job commonly found in the marketplace which is used as a reference point for making pay comparisons or measurements. Benchmark jobs have well-known and stable contents.

Base Pay: The rate paid by the hour, week, month, or year to an individual for the job performed. This does not include shift differentials, overtime, incentives, benefits, or any other pay element other than base pay.

Compa Ratio: The ratio between current pay to the salary range assigned to the job. A compa ratio is used to determine the relationship of an individual’s pay to the midpoint or some other control point of the salary range. It is also used to assess how an individual’s pay is moving through the assigned salary range.

Compensation: All forms of financial returns and tangible services and benefits an individual receive as part of an employment relationship.

Compensation Philosophy: A set of principles that guide the design and administration of a compensation system toward supporting the university’s mission.

Direct Compensation:

  • Base salary
  • Premium payments (overtime)
  • Contingent programs (commissions, gratuities, etc.)

Equal Employment Opportunity Commission (EEOC): A commission of the federal government charged with enforcing the provisions of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Equal Pay Act of 1963, and other fair employment practices legislation.

Equal Pay Act of 1963: An amendment to the Fair Labor Standards Act of 1938 prohibiting gender-related pay differentials on jobs that are substantially equal in skill, effort, responsibility, and working conditions unless the differences exist due to a seniority, meritor production-based pay system, or any other job-related factor other than gender.

Essential Functions: The primary job functions or tasks that an individual must be able to perform with or without a reasonable accommodation.

Exempt Job: A job not subject to the minimum wage and overtime provisions of the Fair Labor Standard Act. Generally this group includes executives, administrative/professionals, and outside sales individuals.

Fair Labor Standards Act (FLSA): Federal legislation that sets the federal minimum wage, overtime pay, equal pay, record keeping and child labor standards for employees who are covered by the act and are not exempt from specific provisions.

Incentive Compensation: A reward that compensates an individuals for high performance or for achievement above and beyond the defined normal job requirements.

Indirect Compensation:

  • Protection programs (social security, workers’ compensation, unemployment compensation, retirement plans, health, dental, life, accidental death, short-, and long-term disability insurance)
  • Paid leave, when individual’s are not at work (vacation, holidays, jury duty, military leave, etc.)

Intangible Compensation: Non-monetary rewards (work/life balance, on-the-job training, development opportunities, etc.).

Internal Equity: A standard that fairly establishes a pay level that corresponds to each job’s relative value to the organization.

Job Analysis: Systematic study of jobs to identify the observable work activities, tasks and responsibilities associated with a particular job or group of jobs.

Job Description: An official, written description of a job, which includes information regarding the general nature of the work to be performed and specific responsibilities, duties and qualifications.

Job Title: A specific name given to a particular job that is used to identify that position.

Market Pricing: A process that sets the rates (values) to be paid for a job to the organization’s best estimate of the current value for that job in the external marketplace.

Merit Increase: An adjustment to an individual’s pay that is based on performance as measured through a performance appraisal.

Non-exempt Job: A job subject to the minimum wage and overtime provisions of the Fair Labor Standard Act. Generally this group includes administrative support, technical/para-professionals, skilled craft, and service/maintenance jobs.

Overtime: Under the Fair Labor Standards Act, working more than 40 hours in a workweek. Non-exempt individual’s must be paid at least one and a half times their normal wage rates or receive compensatory time for all hours worked in excess of 40 in any workweek.