Compensation Policy

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									This Compensation Policy can be used by a company to establish compensation rates
and annual increases and how deductions are to be issued to employees. This
template covers all types of employees, from support staff and professional staff, to
upper third employees and management. Additionally, this template is designed to
meet the standards of the Fair Labor Standards Act (‘FLSA”). This document should be
used by small businesses or other entities to establish a consistent and universal
compensation policy for all of their employees.
Compensation Policy                                                   Policy Number: ___
Policy Owner: Human Resources / Payroll                               Page No. 2 of 2
                            Date of Policy: ___                       Date of Revisions: ___

I.        Scope of Policy

This policy applies to: (1) ___[Company Name] and its wholly-owned subsidiaries and
affiliates; (2) any other entity or organization in which ___[Company Name] owns a direct or
indirect equity interest of fifty percent (50%) or more; and (3) any organization or company in
which ___[Company Name] or an affiliate either manages or controls the day-to-day operations
of the organization or company (each a “___[Company Name] entity”), and all employees,
contractors and temporary workers of any ___[Company Name] entity. All such references to
___ [Company Name] shall hereinafter be referred to as “Company.”

II.       Purpose

The purpose of this policy is to:

       1. ensure the company’s compliance with the Fair Labor Standards Act (FLSA) regulations;

       2. to attract qualified candidates;

       3. to provide a level of compensation that will motivate staff to provide their best work; and

       4. to communicate to staff Company’s basic compensation procedures.

III.      Policy

It is the policy of Company that compensation is determined in accordance with applicable law
and regulation, including the FLSA; and that where applicable, the requirements of any
collective bargaining agreements as the provisions thereof relate to compensation.

IV.       Procedure

       1. In order to promote this policy, Company will establish rules and regulations to be
          followed by all stakeholders.

       2. Company will increase awareness of this policy through the use of regular
          communication, training and education.

       3. Company will determine employee compensation by using the following indicators and
          applying a predetermined formula that accounts for the statistical weight of each indicator
          in Company’s geographic area.

              a. Salary surveys prepared by reputable firms that include data specific to
                 Company’s industry and geographic area.

© Copyright 2013 Docstoc Inc.                                                               2
Compensation Policy                                                                          Policy Number: ___
Policy Owner: Human Resources / Payroll                                                      Page No. 3 of 2
                            Date of Policy: ___                                              Date of Revisions: ___

                       b. Department of Labor standards and the requirements of the FLSA.

                       c. Experience level of the employee.

   4. Company will determine annual compensation increases by using the following increase
      planning matrix.

                                                                     Where Salary Falls in Pay Range
                                                  Lower Third                 Middle Third              Upper Third
                                            80-93% of market            94-107% of market         108-120% of market
                       Support Staff        value                       value                     value
                                            73-91% of market            92-110% of market         111-127% of market
                       Professional Staff   value                       value                     value

                                                                                                  Moderate increase due to
                       Upper Third          Maximum increase.
                                                                                                  being over market value.
   Performance Level

                       Middle Third
                       (Average Level of                                Median increase.
                                            Less experienced staff
                                            = median or above
                       Lower Third                                                                Minimum or no increase.
                                            Experienced staff =
                                            below median or no

   5. Company will address all disputes related to payroll amounts and payment methods in a
      timely and fair manner.

                       a. Employees are required to report disputes or issues with compensation
                          immediately, but in no event later than seven business days following the date
                          they were first aware of the issue. Disputes and problems should be reported to
                          the employee’s immediate supervisor, who will direct the employee to the proper
                          personnel in the human resources or payroll department.

                       b. The appropriate representative will promptly investigate the claim and will
                          provide the employee with a response in a timely manner.

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Compensation Policy                                               Policy Number: ___
Policy Owner: Human Resources / Payroll                           Page No. 4 of 2
                            Date of Policy: ___                   Date of Revisions: ___

           c. If a compensation error has occurred, the appropriate representative will take
              steps to correct it and prevent recurrence. The representative will further
              determine if the same mistake has occurred in the past, and if so, will remediate
              those issues as well.

           d. The resolution of all compensation issues will be documented and placed in the
              employee’s records, along with the employee’s acknowledgement of the same.

     6. Company may, in certain instances, deduct amounts from an employee’s pay, where such
        employee is exempt from overtime. The following list is inclusive of some such
        deductions, but may not be exhaustive of all potential deductions.

           a. Absences when an employee has no accrued vacation, sick, personal, or other

           b. For penalties imposed as the result of lost identification badges or other Company
              property, or for safety infractions that are the result of the employee’s willful
              negligence or are repeated subsequent to appropriate remedial actions.

           c. Deductions permitted by the Family Medical Leave Act.

V.      References

     1. Fair Labor Standards Act (29 USC §201)
     2. Family Medical Leave Act (29 USC §2601)

© Copyright 2013 Docstoc Inc.                                                         4
Compensation Policy                                                                             Policy Number: ___
Policy Owner: Human Resources / Payroll                                                         Page No. 5 of 2
                            Date of Policy: ___                                                 Date of Revisions: ___

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