Regulatory Compliance Dictates HR Best Practices

This year, we’ve seen a number of new government rules surrounding pay equity and salary transparency developing. This puts a strain on human resource compensation managers and how they must adapt compensation policies. How well HR can keep up with these changes will dictate the future of compensation planning across all organizations.

What are some of the more recent rules impacting compensation?

Five years after the law was initially passed, The Securities Exchange Commission (SEC) put forth the “CEO pay-ratio” rule that requires companies to prove executive salaries are directly tied to company performance. And really, this action was long overdue. In 2014, the AFL-CIO reported that CEO salaries were 373 times higher than those of the average worker. Consequently, the US is already behind European nations, which faced similar mandates—designed to move towards greater transparency in business earnings and close the poor vs. wealthy gap.

Then there was the new federal overtime rule that President Obama announced in June, amending the FLSA for the first time in many years. Overtime will now cover nearly 5 million white collar workers who previously earned too much to qualify for overtime payments. The new threshold is set at $970 per week, or $50,440 annually – a victory for the shrinking middle class. This article in the Business Journals explains the change in greater detail.

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How can compensation professionals develop best practices around these changes?

Obviously, HR professionals and comp managers will need to proactively create systems for managing the above regulatory changes. It is their job to confirm that comp processes are adjusted, transparent, and compliant with these regulations. They can do this by:

  • Securing the right HR data management and reporting systems that are geared towards current and future changes.
  • Partnering with a salary survey company that can create current salary ranges for all work types, especially those affected by the above mandates.
  • Staying ahead of any and all compensation trends, including those relating to ACA and FLSA laws.
  • Being the chief compensation strategist for their organizations by staying educated and leading their teams with the right information.

If you want to learn more about ways you can best manage regulatory compliance during these times of change, be sure to read our free downloadable reports available to you on demand from PayScale.


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