Is Your Compensation Reasonable?

There are two universal principles regarding the reasonableness of employee compensation: (i) most people feel they are undercompensated and (ii) those same people feel their friends and neighbors are overcompensated. There are many reasons for this phenomenon, but for our unscientific purposes it’s enough to think of reasonableness like beauty – it’s in the eyes of the beholder. READ MORE

OFCCP Guidance on Privilege Assertions Over Pay Equity Audit Materials

Since President Biden took office in January 2021, employers’ compensation and nondiscrimination practices have been under increasing scrutiny by the federal government. For example, the recently issued Directive 2022-01—the Office of Federal Contract Compliance Programs (OFCCP) of the United States Department of Labor’s first directive since President Biden took office—directly underscores that pay equity is a priority of the new administration. This Directive, among other mandates, makes clear that OFCCP intends to challenge whether employers can rely on the attorney-client privilege and work product doctrine to protect internal pay equity audits from being produced when requested by OFCCP as part of its investigations into regulatory compliance. As a result, companies should be particularly mindful of how they conduct internal pay equity analyses going forward. This is especially important considering OFCCP Director Jenny Yang has recently declared that going forward, it is “redoubling its efforts to remove barriers to pay equity.” READ MORE

Inflation gave most Americans a 2.7% salary cut in March

The tightest labor market in years is fueling rapid wage gains for most workers – the only problem is that red-hot inflation is quickly eroding those increases. 

The Labor Department reported on Tuesday that average hourly earnings for all employees actually declined 2.7% in March from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings tumbled by 0.8% in March, when factoring in the 1.2% inflation spike. READ MORE

NYC business groups say salary transparency would make it harder to hire diverse candidates

New York City businesses are pushing back on a law that would require them to publish salary ranges on job ads, intended to close the racial and gender wage gaps, with some citing concerns that it will hinder their diversity efforts in hiring.

The legislation was approved by New York City Council in December 2021, became a law when Mayor Eric Adams declined to veto it by January 2022 and is set to go into effect May 15. READ MORE

Four Exec Comp Considerations High-Growth Companies (Literally) Can’t Afford To Ignore

How can a founder or CEO all but ensure success? While there’s a case to be made for company vision, product, time-to-market and even luck, many serial founders say nothing is more critical than a solid executive team. About 900 leading venture capitalists agree (registration required), citing company leadership as the most important determinant of portfolio companies’ triumphs and failures—“by far.” READ MORE

Cryptocurrency As Compensation: Beware Of The Risks

A small but growing number of employees are asking for cryptocurrency as a form of compensation. Whether a substitute for wages or as part of an incentive package, offering cryptocurrency as compensation has become a way for some companies to differentiate themselves from others. In a competitive labor market, this desire to provide innovative forms of compensation is understandable. But any company thinking about cryptocurrency needs to be aware of the risks involved, including regulatory uncertainties and market volatility. READ MORE

Worries about wage inflation ‘overdone’, think tank says

Worries about wage inflation have been ‘overdone’, a think tank has said, arguing that headline figures fail to take into account the end of the furlough scheme.

Since restrictions began to lift at the beginning of this year, employers have faced warnings of record wage inflation, with official figures showing nominal pay grew 4.1 per cent in the year to January 2022, compared to an average of just 2 per cent in the decade before the pandemic. READ MORE

Wage-price spiral alarm risks prolonging real income funk

Fear of a 1970s-style wage-price spiral is being used by central banks to stiffen monetary policy - but by slowing economies now they may just exaggerate an overarching long-term ill of falling real incomes.

For decades, policymakers used anxiety about wage growth chasing inflation higher, thereby pushing up prices further in a self-reinforcing loop, as reason to pre-emptively slow economic activity and quickly snuff out periodic pops in inflation. READ MORE

Salary discrepancies between new hires and more tenured staff concern employers

A survey by Robert Half International Inc. (NYSE: RHI) found employers have concerns over pay equity between newly hired employees and staff members that have been around for a while.

The company said 56% of C-suite executives have seen salary discrepancies between new hires and more tenured staff in the past year indicating pay compression. And 62% are regularly reviewing compensation plans and increasing salaries for existing employees to align with current market rates. READ MORE

IRS Proposes Rule Changes To 403(b) Retirement Accounts

The Internal Revenue Service (IRS) is proposing rule changes to Section 403(b) retirement plans that might change required minimum distributions (RMD), how to start accessing the funds, and the accounting methods for plan administrators. The adjustments are due to changes in various laws updated in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). Among the adjustments made by sections of the SECURE Act apply to an employee who dies on or after Jan. 1, 2020, with a later effective date for certain collectively bargained plans or governmental plans. READ MORE