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Compensation and Incentive Plans.
You are the Director of Compensation and Benefits for Lansing-Smith Corporation, a 6-month old sales and service organization that currently has a workforce of 150 employees. You recently joined the organization when the Vice President of Operations decided to move the Compensation and Benefits function out of the Accounting Department, into a separate function. From your own observations you have identified several areas in need of review, redesign or development, including projects such as an audit of current pay plans to ensure they are aligned with federal regulations, an analysis of various pay plans to assess which plans will provide maximum benefit for Lansing-Smith, extensive job analyses to ensure a solid understanding of each position, job evaluations to determine the worth of the positions, consideration of various incentive plan designs to identify a plan that effectively drives individual and group performance to achieve production goals and research, development, communication and management training for a company-wide performance appraisal process.
You are dedicated to developing compensation and benefit practices that are motivating and empowering for employees. You are confident that with well-developed programs and practices, employees will be motivated to perform at higher levels, thereby driving overall company performance.
Task needing assistance:
One of your responsibilities as Director of Compensation and Benefits for Lansing-Smith is to ensure compliance with the Fair Labor Standards Act. You have learned that employees were hired into various roles with little regard for legal requirements affecting employee compensation. In your review of the pay plans, you notice that all employees (including clerical employees, managers, supervisors, sales staff, customer service staff, accountants) have been classified as Exempt status. Additionally, with no structured pay plan, you are concerned that some employees may have been hired without regard to minimum wage requirements.
Develop a plan to address this issue for Lansing-Smith. You should consider the following in your plan:
1. What are the risks with the current process?
2. What are the definitions of exempt and non exempt classifications and what is the application to this situation?
3. Consider overtime pay implications
4. Consider legal ramifications/penalties for violations of the law, what exposure does this present?
5. What are your conclusions and recommendations?
6. Develop a detailed plan to address any concerns and bring the company back in line with legal regulations.