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Human Resources: Min Wage, Exempt Employees & COLA

Maxim is a large, regional department store chain located on the West Coast. As the store manager of the Portland, Oregon, store, you are responsible for overseeing all operational aspects of the store, including making decisions about how employees will be paid. Maxim gives you a great deal of autonomy in deciding how to run the store, one of the factors that attracted you to this particular assignment. One of the first tasks you have decided to do is evaluate the wages being paid to employees. This task is particularly important given the high turnover rate the store experiences. Comments made by exiting employees suggest that the primary reason for their decision was the lower than market pay for their jobs. Sales associates currently make $8.50 per hour. Department supervisors make $14.25.

1. What is the current federal minimum wage and what employees are entitled to receive this wage? Investigate whether or not the state in which your store is located has a higher minimum wage than the federal minimum wage.

2. You know that some of your employees are classified as exempt and some as nonexempt. Find out what these terms mean and how the decision is made about which employees are exempt and which are nonexempt. According to these guidelines, are your sales associates considered to be exempt or nonexempt employees?

3. The store has a policy of periodically giving cost-of-living adjustments (COLAs) to all employees. Search the Web and find: (a) what cost-of-living salary adjustments are usually based on, and (b) what is the most recent consumer price index (CPI)? How does the West CPI compare to the national CPI? Based on this information, what COLA do you propose for the store in Portland?

4. You are not sure how the wages of your store compare with wages at similar establishments in town. Locate wage data for the area in which your store is located. You want to find information about sales associates and retail managers. How do the local wages for both jobs compare with what Maxim is currently paying? Summarize your results and make a recommendation as to how much Maxim should pay for both jobs.

Solution Preview

Current federal minimal wage, what employees are entitled to receive this and the Oregon State minimum laws.
The current federal minimum wage as at July 24, 2009 is $7.25 per hour for covered non exempt employees as stipulated under the Fair Labor Standards Act (FLSA). In the case that an employee is subject both to state and federal minimum wage laws, them the employee will be entitled to receive the higher minimum wage of the two. As shown, minimum wage applies only to covered non-exempt with various persons exempted. These include full time students, workers with disabilities, tipped employees, youth under 20 years of age in their first 90 consecutive days of work and student learners in an organization (United states Department of Labor, 2011).

The minimum wage law under FLSA applies to employee who works for enterprises that have at least $500,000 in gross annual sales of business done. It also applies to individual employees working for smaller organizations and who are involved in interstate business or production of goods for commerce such as those in the communication and transport industry or those such as maintenance employees, janitors or guards involved in interstate work activities. Similarly it applies to federal, state and local government employees as well as domestic workers and employees in schools and hospitals (United States Department of labor, 2011).

In Oregon State the basic minimum wage rate per hour is $8.50 higher than the federal minimum wage rate per hour of $7.25. The rate is adjusted annually for inflation calculating it using the U.S. City average consumer index for all urban consumers for all items (United States Department of Labor, 2011a).

Exempt and non exempt employees:

All workers in a business must be classified as exempt or non exempt by their employer based on set criteria by the law. Exempt implies that than an employee is not entitled to the protections, regulations and benefits of FLSA and therefore as an ...

Solution Summary

This solution discusses the federal minimum wage, the classification of exempt employees, and COLA.

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