Hot Topics in Total Rewards

By Kathryn Mayer | October 21, 2022

Spurred by soaring inflation, which has been on an upward trajectory over the last year, the Internal Revenue Service pushed the cap for flexible spending accounts next year above $3,000 in one of the larger increases in recent years.

Employees will be able to contribute $3,050 to FSAs—made pretax through salary reductions—in 2023, the agency said this week. That’s up $200 from this year’s $2,850 limit. FSA limits generally increase by about $100 each year.

For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610—an increase of $40, the IRS said.

Shobin Uralil, co-founder and COO of health savings account provider Lively, says the increase in FSA contribution limits is “a step in the right direction” but isn’t enough to address financial concerns from employees. “Americans are seriously struggling due to high inflation rates, and the reality is that they will need more ways to save and invest their dollars to protect their retirement,” he says.

Indeed, the 7% increase for FSA limits is still lower than the current inflation rate, which is 8.2%, according to the latest consumer price index. Inflation has taken its toll on nearly all aspects of employees’ finances, from monthly expenses to emergency savings and retirement savings, information that is spurring many employers to make changes in the form of salary adjustments, bonuses or enhanced financial wellness benefits.

Still, a bigger increase in FSA limits—as well as health savings accounts—can be helpful for workers. The IRS back in May announced its 2023 annual HSA limits, which also increased more significantly in response to inflation. Health savings account contribution limits for an individual with self-only coverage will jump to $3,850—a significant $200 increase from $3,650 for this year. Last year, the amount climbed just $50 from $3,600 for 2021. For family coverage, the HSA contribution limit jumps to $7,750 next year from $7,300 in 2022.

Experts say employers would be wise to promote HSAs and FSAs and encourage workers to increase their contributions as a helpful way to assist with medical costs.

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Source: Human Resources Executive

https://hrexecutive.com/2023-fsa-limits-increase-in-response-to-rising-inflation/

Pay transparency is having a moment. Here’s what you should know.

by Taylor Telford on October 3, 2022

 

California companies with more than 15 employees will be required to list salary ranges for jobs and make that information available to existing employees thanks to a new law signed last week by Gov. Gavin Newsom (D).

The law represents a major win in the growing push for pay transparency, which experts say is a critical lever for countering the wage gap. In California, women lose $87 billion to the pay gap each year, according to Newsom’s office.

Here’s what you need to know.

•      What does the law do?

•      Which other states have adopted pay transparency measures?

•      Why does it matter?

•      How should employers respond?

•      How should employees make use of this information?

What does the law do?

Companies in California were already required to provide pay scale information for job candidates upon request, but after the new law takes effect on Jan. 1, 2023, companies with 15 or more employees will have to do so for all postings, both internal and external.

The law applies to roughly 200,000 companies, which employ about 19 million workers, the vast majority of California’s labor force.

Companies with 100 or more employees will also be required to report detailed pay information to California’s Department of Fair Employment and Housing annually. Updated pay data reports will be due starting May 10, 2023. Companies could face fines of $100 per employee for failing to comply.

California is home to scores of corporate giants, including Google, Meta, Oracle, Apple, Uber and Lyft.

Peter Bamberger, scholar with the Academy of Management and a professor in the Coller School of Management at Tel Aviv University, said that the law represents “the strongest legislative effort for pay transparency in the U.S. to date.”

“For employees, this legislation takes a good part of the guessing game out of pay negotiations and levels the playing field in such negotiations,” Bamberger said, noting that it is similar to the type of pay transparency regulations seen in much of the European Union.

Which other states have adopted pay transparency measures?

Colorado, Connecticut, Maryland, Nevada, Rhode Island and Washington have enacted some form of pay transparency laws. New York City has a law taking effect Nov. 1, while New York state’s law is awaiting the governor’s signature.

But while other state measures tend to require posting salary ranges in ads, only California’s law gives existing employees the ability to access the same information, according to Greg Selker, managing director at Stanton Chase, a global executive search firm.

Companies could face a cost — in the form of public image and talent retention — for failing to address pay inequality in their ranks, Selker said.

Why does it matter?

Pay transparency is seen as critical to reducing gender and racial pay gaps. Women in the United States earned 17 percent less than men in 2021, according to the most recent available data from the organization for Economic Cooperation and Development.

For women of color, the gap is often greater: Black women earned roughly 88 percent of the median wages of White women in the second quarter of 2022, according to data from the Bureau of Labor Statistics, while median earnings of Hispanic women were about 79 percent of White women.

Black men earn 82 percent of the median earnings of White men in the second quarter of 2022, according to the Bureau of Labor Statistics, while the median earnings for Hispanic men were 75.5 percent of the median for White men. Earnings of Asian men and women were higher than their White counterparts.

How should employers respond?

Employers should view this as “an opportunity to identify and correct potential disparities that they had not previously focused on,” according to Jennifer Cormier, a partner at Ropes & Gray, a firm with expertise in employment law.

The new law may create challenges for companies that have not been actively considering pay equity issues, so employers should work with legal counsel to ensure that they are complying, Cormier said. Employers can also conduct their own pay equity audits with an outside consultant.

Companies could also benefit from understanding their rivals’ compensation packages for similar positions if they want to be competitive in the labor market.

“Ultimately, employers who embrace pay transparency could also potentially better attract top talent and increase employee morale,” Cormier said.

How should employees make use of this information?

Employees should study the pay ranges that are made public and use that information in bargaining. In coming years, employees should request a copy of the annual pay equity reports from their employer to make sure they are being compensated fairly, Bamberger said.

Armed with the new pay information, employees can also meet with compensation and HR professionals to learn how to best advocate for themselves, said Emily Dickens, chief of staff at the Society for Human Resource Management.

“It’s going to require more than just recognizing that there are systemic gaps that do adversely impact one group over another,” Dickens said. “You can have all the laws on the books, but it’s going to take effort on both parts.”

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Source: The Washington Post

https://www.washingtonpost.com/business/2022/10/03/faq-california-pay-transparency-law/

BYSHERYL ESTRADA

September 8, 2022 at 3:24 AM PDT

Annual pay raise budgets in the U.S. are getting a bump in 2023 from the longtime status quo.

“The increases have gone up from what had been 3% for many years,” David Turetsky, VP of consulting at Salary.com, told me. “It’s now budgeted for 4% and potentially higher for next year.”

New data released by Salary.com, a software company that provides compensation data and analytics, found that the median pay increase of 4% is continuing an upward trend that began in 2022.

For salary budget planning, the factors usually considered in raises include a general increase (which considers inflation), equity/market adjustment, and merit increases, according to the data.

Unemployment is low right now, Turetsky says. “There are skilled and unskilled roles that are going unfilled,” he says. “And that’s putting a lot of pressure on the starting rates for those jobs.”

He continues, “We usually see job switchers get large pay increases when they go to other places. Now we’re seeing people who are what we call ‘stayers,’ people who stay in roles, are saying, ‘Well, what about me?’ And so these 4% increases are for the job-stayers.”

For the past 10 years, since recovery from the financial crisis of 2008, the average wage increase percentage has been about 3%, Lori Wisper, a managing director at the advisory firm Willis Towers Watson, recently told me. Coming up with a salary budget “is not arbitrary for most companies, especially big companies, where even a 10th of a percent represents millions, maybe even hundreds of millions of dollars in payroll,” Wisper said. 

Salary.com’s survey of more than 1,000 companies in a range of industries conducted in June found that the median 4% increase planned for 2023 is across all employee categories—executives, managers, and exempt and nonexempt employees. However, that data showed that the actual median increase in 2022 for executives was 3.5% compared to 4% for all other categories.

“I think it’s saying that executives basically said, ‘Look, we’re going to take a little bit less so we can give the other groups more,’” Turetsky says. “Actually, executive salary isn’t typically the highest driver of pay. Usually incentives or stock or something else is a larger component of pay.” Stock and stock-option awards certainly boosted executive compensation in 2021. For example, the median pay packet for leaders of S&P 500 companies rose roughly 12% to $14.7 million that year. 

Salary.com also found that when it comes to salary percentage increases, the health care industry was an outlier. Health care median total increases in 2022 were just in the 3% range. Salary increases in the health care industry are impacted by reimbursement limits imposed by private and federal health insurers, according to the report.

Although there’s historic inflation this year, smaller organizations (under 500 full-time employees) were more likely to provide cost of living increases than larger organizations, according to the report. Average cost of living increases for smaller organizations were in the range of 2.5–2.7% higher than the typical 2% provided by larger organizations.

When it comes to overall salary percentage increases, “a lot of companies are planning to do more next year,” Turetsky says. A quarter of employers surveyed plan to give increases in the range of 5–7%. And 48% said they planned on salary budget increases that are higher or significantly higher than in 2022.

“Salary budgeting time [for next year] is actually right now,” he says. “HR is working with their CFO partners to basically say, ‘How much can we afford to pay?'”

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Source: Fortune

https://fortune.com/2022/09/08/goodbye-standard-3-percent-raise-employers-increase-next-year/

ARLINGTON, VA, September 14, 2022 — In light of the increased legislation on pay transparency, the number of North American organizations that disclose pay rate and range information to prospective employees is expected to surge across the U.S., even in places without requirements. This, according to a new pulse survey by leading global advisory, broking and solutions company WTW (NASDAQ: WTW).

“We expect the recent wave of pay transparency legislation to continue.”

Mariann Madden | North America Fair Pay co-lead, WTW

The 2022 Pay Clarity Survey found that 17% of companies are already disclosing pay range information in U.S. locations where not required by state or local laws. In addition, 62% of organizations are planning or considering disclosing pay rate information in the future, even where there are not local mandates requiring them to do so. This will include information such as hiring range and full salary range, with 58% of companies planning on doing the former and 48% the latter. The survey found that 71% of companies plan to use a consistent approach in determining which pay rate and range information will be disclosed across all jobs. Over half of organizations (57%) are applying a geographic pay policy to determine the pay rates or ranges, and they will differ based on location of the job.

Interestingly, some organizations that currently disclose pay rates are seeing more questions from current (38%) and prospective (27%) employees. Nearly one in six companies (16%) are also seeing an increased number of candidate applications.

“We expect the recent wave of pay transparency legislation to continue,” said Mariann Madden, North America Fair Pay co-lead, WTW. “Regulatory requirements are only one factor in the expected increase in disclosures and communication about pay. Job seekers and current employees want to know and understand that they are treated fairly and are provided with equal opportunities to thrive and grow within the organization.”

Still, some companies are holding back on communicating pay information. About three in 10 (31%) organizations say their pay programs are not ready for this kind of transparency. Almost 30% cite administrative complexity and 25% cite lack of clear job architecture as reasons to hold back. In part due to these underlying considerations, almost half of all organizations (46%) cite possible employee reactions as a reason for holding back on communicating about pay.

The survey also found that most organizations plan to provide a narrative on their approach to managing pay equity. One-third of North American organizations (33%) are already disclosing information on their approach to managing pay equity, and 53% expect to do so in the future and on a global level.

“We’re seeing a clear trend among employers around the globe publicly committing to fair pay. In North America, companies are beginning to disclose their adjusted pay gaps, while in Europe more organizations are sharing their fair pay ambitions as well as their plans to monitor, track and communicate progress toward their commitments. We expect that level of transparency will likely become the norm as external stakeholders demand more clarity and visibility into companies’ pay management practices,” concluded Lindsay Wiggins, North America Fair Pay co-lead, WTW.

About the survey

WTW’s 2022 Pay Clarity Survey, North America was conducted between June 27 and July 8, 2022. In North America, a total of 388 respondents completed the survey.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

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Source: WTW (Willis Towers Watson)

https://www.wtwco.com/en-US/News/2022/09/more-north-american-organizations-plan-to-disclose-pay-information-survey-finds

Many equal-pay-for-equal-work initiatives focus on women, but it’s so much more complex than that, the research notes.

Published Sept. 22, 2022 by Caroline Colvin

Three out of four executives said they consider pay equity to be a “moderate” or “high” strategic priority; 7 in 10 workers said they feel that compensation is also an “important” priority for their organizations, a UKG report published Sept. 19 suggested. 

But within that same pool of 453 corporate executives and 3,005 employees of all ranks, half of employers and 38% of employees admitted that their company did not have a pay equity program.

In comparison, about a quarter of employers and a quarter of employees could point to “a well-established program” in place. The remaining respondents said they had just started a program or that it was “ineffective,” and 24% of employees told UKG that they didn’t know either way.

This study, done in partnership with the Harvard Business Review Analytic Services, takes the temperature of prevailing approaches to equity strategy. It also emphasizes the importance of intersectionality. 

Many equal-pay-for-equal-work initiatives have been tailored to women — something UKG reconfirms in its study — but the phenomenon of pay disparities is much more complex than gender discrimination. It’s “an intersectional issue that cuts across race, color, and sexual orientation,” the report said.

UKG surveyed employers generally and, specifically, employers of efficient, well-established equity programs (called “leaders” by UKG) regarding which social groups were the focus of their pay initiatives. Both groups were aligned on tackling the gender pay gap and racial inequities in compensation. Employers — as opposed to those deemed leaders— lagged behind in creating pay programs that included the LGBTQ community, workers with disabilities, people over 50 years old and religious minorities.

In the report, Brian K. Reaves, UKG’s executive vice president and chief belonging, diversity and equity officer, pointed out that gender-based pay discrimination has been illegal for decades. Still, the pay gap “widens even further when you look at intersectionality such as Black, transgender, and immigrant women.”

A factor that is often glossed over was the culture of silence around salary and compensation. Overall, 34% of workers surveyed told UKG that silence is a “major obstacle” to implementing equal pay. Black, Hispanic and Latinx were twice as likely as White workers to remain silent, researchers observed. Asian-American employees were also more likely than White workers to remain silent.

In turn, workers of colors feel like they are most in need of help: 35% of Black employees, 26% of Asian Americans, and 20% of Hispanic and Latinx workers told UKG that racial discrimination factored in whether they had opportunities for advancement. This rings true even at the baseline, where 32% of Black and 25% of Asian, Hispanic, and Latinx employees said that racial discrimination factored into their salaries or hourly rates. Salary negotiation abilities were also a pain point, causing workers of color more distress than their White peers.

Researchers said the task of attaining equity “requires a deeper examination of varying perspectives and a more granular look at pay data.” While no one-size-fits-all equity fix exists, UKG’s solution recommends doubling down on collecting demographic data on compensation. Specifically, researchers suggested employee pulse surveys — “an opportunity to collect ongoing, anonymous feedback to help organizations know how their people feel” — as an option.

“Business intelligence and analytics tools that rely on data also allow organizations to see where inequities exist, so they can ensure fairness throughout the employee lifecycle,” researchers said in the press release.

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Source: HR Dive

https://www.hrdive.com/news/study-employers-miss-the-mark-on-pay-equity/632450/

BY ALEX GANGITANO - 08/24/22 11:35 AM ET

President Biden officially announced on Wednesday that his administration is forgiving up to $10,000 in federal student loan debt for borrowers making less than $125,000 annually and $20,000 for Pell Grant recipients, marking the largest forgiveness of the loans per individual to date.

Biden also again extended a payment freeze on federal student loans and interest accrual, butting right up against an Aug. 31 deadline that would have kicked bills back into effect just before November’s midterm elections.

The payment pause is now in effect until Dec. 31 and the White House said the pause is extended “one final time,” indicating that January will mark the end of the years-long student loan payment freeze.

The White House also said that if borrowers have undergraduate loans, they can cap repayment at 5 percent of their monthly income. Current students with loans are also eligible for this debt relief, and dependent students will be eligible for relief based on their parents’ income.

Biden shared the announcement on Twitter and plans to deliver remarks at 2:15 p.m. on Wednesday.

“In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023,” Biden tweeted.

Pell Grant borrowers also have to make less than $125,000 annually, or $250,000 annually if they are part of a household, to qualify.

Senior administration officials said the plan announced on Wednesday will benefit tens of millions of middle-class Americans. Officials said that if everyone who is eligible claims the relief, 43 million federal student loan borrowers will benefit, and 20 million borrowers will have their debt completely canceled.

“This announcement will help people who by and large came from working families and our working class now,” one official said.

“By targeting relief to borrowers with the highest economic need, this plan helps narrow the racial wealth gap,” the official added.

The Hill had reported on Tuesday that the White House would announce a plan to cancel a chunk of student loan debt and an extension of the existing pause, citing multiple sources. The announcement comes within the smallest window of time borrowers have had to determine when their payments would resume, which has aggravated advocates due to it leaving borrowers in limbo.

Loan payments were first put on hold in March 2020 under former President Trump, and the freeze has since been extended six times. Trump’s order froze the accrual of interest on federal student loans, effectively putting on hold $1.6 trillion in debt owed by more than 40 million Americans.

Officials addressed criticism that student loan forgiveness will have a negative impact on inflation, arguing that these steps largely offset and “it could well be neutral or deflationary.” Republicans have strongly come out against proposals for student debt relief and denounced them as unfair and inflationary.

“The combination of restarting those loan payments and providing targeted debt relief, per the president’s plan, at roughly the same time, will largely offset each other. That’s our view,” an official said.

The Department of Education said in a statement that it will be announcing further details on how borrowers can claim relief in the weeks ahead. Officials said some borrowers will have to submit “a simple application that goes to their income.”

The department also announced it is making changes to the Public Service Loan Forgiveness program, which allows borrowers working in public service to gain progress towards their loans, by allowing more payments to qualify for the program and allowing various deferments and forbearances, such as for those in the Peace Corps.

Additionally, the department will propose a rule to hold career programs accountable through measures such as publishing an annual “watch list” for those with the worst debt levels.

While the cancellation will be celebrated as the most far-reaching move to help student loan borrowers, activists and some Democrats will also likely call for more in student loan forgiveness, like forgiving up to $50,000 per borrower, or overhauling federal loan programs.

The White House has faced fierce pushback at the idea of means-testing to decide which borrowers are granted student loan forgiveness after reports had surfaced that it would limit relief to people earning below $125,000.

Biden had kept his next move on student loans payments, including whether to forgive any amount of debt, largely under wraps, though he told reporters last month that “the end of August” was his timeline for making a decision.

Education Secretary Miguel Cardona said on Sunday that a decision on the matter would come within the week.

The Education Department had said that borrowers will be communicated to “directly” about the end of the freeze, following reporting last month that student loan servicing contractors have been told to not send upcoming billing statements.

Biden has been under pressure from Democrats and advocates to extend the freeze, as well as act on student loan forgiveness. 

Last month, Sen. Bob Menendez (D-N.J.) led a letter signed by over 100 Democrats in Congress calling for Biden to extend the pause, citing the economic hardship some have faced due to the coronavirus pandemic, as well as the squeeze rising inflation has put on consumers nationwide.

In May, Senate Majority Leader Charles Schumer (D-N.Y.) and Sens. Elizabeth Warren (D-Mass.) and Raphael Warnock (D-Ga.) met with Biden to push for loan forgiveness. Advocates and other Democrats, including Schumer, have pressed for forgiveness of $50,000 per borrower or to cancel debt entirely. 

Biden announced in June that he would cancel billions in student debt for former Corinthian College students, which raised pressure on the White House to offer more extensive relief.

During the 2020 campaign, Biden supported forgiving at least $10,000 in federal student loans per person. Over a year ago, he requested a memo from the Department of Education to determine his authority to forgive student debt through executive action. Since then, the administration has not publicly announced if the memo is complete.

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Source: The Hill 

https://thehill.com/homenews/administration/3611977-biden-cancels-some-student-loan-debt-extends-pandemic-payment-pause/

• Employers avoid benefit cuts despite new cost pressures

August 11, 2022 09:00 AM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--US employers expect health benefit cost per employee to rise 5.6% on average in 2023, according to early results from Mercer’s National Survey of Employer-Sponsored Health Plans 2022, which launched June 22 this year and remains open.

“They must manage rising health care costs while making smart decisions about how to attract and retain the workers they need. For now, we are seeing the majority of employers prioritizing attractive benefits.”

While significantly higher than the increase of 4.4% projected for 2022, the 2023 increase lags overall inflation, which is currently running at about 9%. According to Sunit Patel, Mercer’s Chief Actuary for Health and Benefits, “Because health plans typically have multi-year contracts with health care providers, we haven’t felt the full effect of price inflation in health plan cost increases yet. Rather it will be phased in over the next few years as contracts come up for renewal and providers negotiate higher reimbursement levels. Employers have a small window to get out in front of sharper increases coming in 2024 from the cumulative effect of current inflationary pressures.”

Patel also cautions that while most large, self-insured employers have a good sense of their 2023 costs at this time, many smaller, fully insured employers have not yet received renewal rates from their health plans. “Those may well come in higher as insurance carriers hedge their bets in today’s volatile health care market,” he added.

The projected increase of 5.6% reflects changes that employers plan to make to hold down cost. If they made no changes, respondents indicated that the cost for their largest medical plan would rise by an average of 7.0%.

Employers are prioritizing benefit enhancements for 2023

The survey asked employers to rate nine benefit strategies in terms of their importance over the next 3-5 years. “Enhancing benefits to improve attraction and retention” came out on top, with 84% of large employers (those with 500 or more employees) rating it important or very important. It’s an even higher priority than “monitoring and managing high-cost claimants,” which was second this year but historically tops the list.

“In today’s environment of record-breaking inflation and widespread labor shortages, employers face a really tough balancing act,” says Tracy Watts, Mercer’s National Leader of US Health Policy. “They must manage rising health care costs while making smart decisions about how to attract and retain the workers they need. For now, we are seeing the majority of employers prioritizing attractive benefits.”

Behavioral health is one benefit area where many employers are looking to expand. Nearly three fourths of large respondents (74%) say that improving access to behavioral health care will be a priority over the next few years. Examples of benefit enhancements include expanding EAP services and adding virtual behavioral health care options.

Focus on health care affordability

Another area of concern is health care affordability. Despite rising costs, the majority of employers will not take cost-saving measures that shift healthcare expense to employees, such as raising deductibles or copays. Only 36% of survey respondents are making cost-cutting changes in 2023, down from 40% in 2022 and 47% in 2021.

Further, overall, employers will not increase employees’ share of the cost of coverage in 2023. Among large employers responding to the survey, employees will be required to pick up 22% of total health plan premium costs, on average, in 2023 through paycheck deductions, unchanged from 2022 and 2021. In a survey conducted earlier this year, Mercer found that 11% of large employers will offer employees free coverage in at least one medical plan in 2023, and another 11% are still considering it.

“Healthcare affordability is a real issue for many employees, especially with inflation stressing household budgets,” said Watts. “Employers want to do what they can to keep more money in employees’ paychecks and remove cost barriers when care is needed.”

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Source:  Business Wire

https://www.businesswire.com/news/home/20220811005163/en/Health-Benefit-Cost-Growth-Will-Accelerate-to-5.6-in-2023-Mercer-Survey-Finds

Quarterly Voice of the Candidate Study Explores Recruiting Experience from the Job Seeker’s Point of View in Q1 2022

August 16, 2022 07:00 ET | Source: PandoLogic

DENVER and NEW YORK, Aug. 16, 2022 (GLOBE NEWSWIRE) -- PandoLogic, a wholly owned subsidiary of Veritone, Inc. (NASDAQ: VERI) and leading provider of artificial intelligence (AI) hiring solutions, today shared the findings of its latest Voice of the Candidate (VOC) Study. With the publication, PandoLogic revisits data from previously available VOC research and reveals the new conversations that emerged in Q1 2022.

Given the rapidly changing state of the job market over the last year, the Q1 2022 results are telling. As the Great Resignation persists even in the face of a possible economic recession, the VOC noted a rise in candidate passion and intensity, with candidates seeing themselves as empowered. Three of the five major trends captured in the VOC directly relate to how employers position openings to job seekers.

First, pay remains a significant driver and jobs with pay information in the title performed much better than those without. In addition, jobs without pay information cost 1.6 times as much per application as those with pay information. Likewise, the remote work conversation continues to increase. Similar to pay, jobs that include remote in the title convert 57 percent better, with a cost per application that is on average 5.5 times lower than those without remote listed. Finally, benefits have become increasingly important, specifically healthcare and health insurance, giving employers the opportunity to increase focus on information in job descriptions and advertising materials.

Taking a unique approach to this subject matter, PandoLogic creates the quarterly VOC in partnership with Parsons Strategic Consulting to obtain a deeper understanding of the candidate experience from the job seeker’s perspective. Using social listening technology, the VOC examines millions of public conversations about the recruiting process and then analyzes the top-mentioned emotions and sentiments.

Terry Baker, president and CEO of PandoLogic, shared, “Since we first launched the Voice of the Candidate research in 2021, PandoLogic has analyzed what candidates think about the recruiting process. The latest insights are especially telling as we’re in one of the most dynamic job markets in recent history. What employers don’t know about candidate expectations may be hurting their hiring outcomes. An effective way to improve recruiting results is to tune in to what the candidates are saying, and PandoLogic is in the unique position to provide this type of insight, given its technology and business model. It is also one reason PandoLogic has successfully driven optimized job advertising results for our clients.”

Download the Voice of the Candidate Study Q1 2022 here.

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Source: GlobalNewswire

https://www.globenewswire.com/news-release/2022/08/16/2498898/0/en/New-Research-from-PandoLogic-Finds-Pay-Scale-Transparency-and-Remote-Work-Options-Lower-Cost-of-Hiring-by-as-Much-as-5X.html

Published On August 22, 2022 - 10:47 AM
Written By Jeanne Kuang

California lawmakers this month are considering a fast food bill that would significantly shift the relationship between restaurant workers and the corporate chains whose products they sell.

If Assembly Bill 257 passes, California would be the first state to assign labor liability to fast food corporations and not just their individual franchise owners.

The bill’s provisions would let workers and the state name fast food chains as a responsible party when workers claim minimum wage violations or unpaid overtime at a franchise location.

The bill’s language also would allow a franchisee to sue a restaurant chain if their franchise contracts contain strict terms that leave them no choice but to violate labor law.

It’s part of a larger bill pushed by unions to more strictly regulate fast food businesses. AB 257 also includes a measure to create a state-run, fast food sector council to set wage and labor standards across the industry.

Last week the bill survived the “suspense file” process, where controversial bills often are quietly killed. After clearing the Senate Appropriations Committee, the bill awaits a vote on the floor. 

Gov. Gavin Newsom has not stated a position on the bill, but his Department of Finance opposes it, saying it would create “ongoing costs” and worsen delays in the state’s labor enforcement system.

If it becomes law, proponents said it could deter wage theft and other abuses in the low-wage industry. 

“How you hold the companies at the top of the food chain, who are really setting the terms and conditions of employment, responsible for the lower levels — California has been way ahead on that,” said Janice Fine, professor of labor studies and employment relations at Rutgers University. “What’s happened in California is a real effort to try to figure out the fissured economy.”

 

California fast food bill

The fast food bill is one of the most contentious measures the Legislature is considering during its final weeks in session. 

The California Chamber of Commerce and the state restaurant association have lobbied hard against it, arguing the bill would upend the franchise business model and ultimately raise costs for franchise owners and consumers. On Wednesday, a group of franchisees flooded the Capitol to oppose the bill.

The Service Employees International Union and its Fight for $15 campaign led a series of strikes this summer to rally for the bill’s passage, including an overnight rally at the Capitol this week. 

Currently most workers who allege wage theft, say, at a McDonald’s, Burger King, or a Jack in the Box can only name the owner of their specific franchise location as responsible for paying them back — even as they work under the banner of a multibillion-dollar fast food corporation. 

In other industries, California already has done some of what AB 257 proposes to do for fast food. In some cases, the state has expanded responsibility for employment conditions beyond the subcontractor or supplier level to the larger companies they do business with, even though they don’t directly employ the workers.

For instance, in 2014 the Legislature made businesses that use contract workers liable for wage theft committed by those workers’ agencies. Lawmakers later did the same for contractors in the janitorial, gardening, construction and nursing home industries.

Last year the Legislature passed a measure putting major fashion brands on the hook for wage theft by garment manufacturers in their supply chains.

 

Wage theft in fast food

Fast food is the latest industry attracting this type of regulation, and it is one of the largest and most visible. 

Restaurants such as fast-food joints, take-out businesses and cafes employed more than 700,000 workers across the state, according to June federal data. Proponents of the bill estimate 80% of the workers are Black, Latino or Asian and two-thirds are women.

SEIU and Fight for $15 say the industry is rife with labor violations. The union released a survey of 400 workers this year in which 85% said they were victims of wage theft. 

Business groups said the bill targets fast food unnecessarily. The Employment Policies Institute, a national think tank with restaurant ties, published a report this month showing the percentage of wage claims filed against this segment of business is lower than its share of the California workforce.

If approved, the proposed legislation could mark a turning point in American labor law.

Typically under the franchise model, fast food corporations strike agreements with franchisees that dictate a variety of standards for selling food under their brand — but leave wages, hours and labor conditions up to the franchisee.  

The model has provided inroads to business ownership for many minority entrepreneurs, supporters point out. 

But critics say companies like McDonald’s and Domino’s have been allowed to profit while distancing themselves from any responsibility for how restaurant employees are treated. 

 

Joint employers?

The question of franchisors’ relationship to workers remains unsettled at the federal level. Across three presidential administrations the National Labor Relations Board has gone back and forth on whether to automatically consider franchisors and franchisees “joint employers.” The courts, including the California Supreme Court, have generally rejected that idea under current laws. 

“These franchise models have been an avenue and way for companies to avoid responsibility for being employers,” said Emily Andrews, director of education, labor and worker justice at the Center for Law and Social Policy, a national, left-leaning anti-poverty organization. 

Studies have found franchisors can exert a significant amount of pressure and control over franchise business owners. 

In a paper published last year, law professors at the University of Miami and Cornell University examined 44 franchise contracts from 2016 and found that more than three-quarters gave the chain exclusive power to terminate contracts, putting a franchisee “in a position of economic dependence.” 

“Franchisees can respond to intensive franchisor monitoring and tight profit margins by unlawfully chiseling wages as the only cost variable that the franchisor does not directly monitor,” the law professors wrote.

The International Franchise Association disagrees, arguing the business model is defined by franchise owners’ independence in labor decisions. The fast food bill, they said, would reduce those owners to middle managers, and larger companies would pull back opportunities in California if they’re required to monitor labor law compliance.

“You’d be holding an entity responsible or assigning liability for things they don’t have control over,” said Jeff Hanscom, spokesman for the Washington, D.C.-based association which includes franchisors and franchisees. “You’re taking a franchise and turning it into the corporate entity.”

 

The Cheesecake Factory case

That argument holds some sway with lawmakers in the state Senate.

During a June hearing for the fast food bill before the Senate Judiciary Committee, some Democratic lawmakers questioned if an automatic expansion of liability is necessary. Sen. Bob Wieckowski, a Fremont Democrat, pointed out that under current law a judge can already find a franchisor liable for a labor violation if it’s proven on a case-by-case basis. 

Representatives for some franchisors, including McDonald’s, Jack in the Box and Burger King, did not respond to requests for comment on California’s fast food bill.

To worker advocates, extending liability is key to enforcing wage and labor laws.

Yardenna Aaron is executive director of the Maintenance Cooperation Trust Fund, a janitorial worker center that pushed for joint liability in that industry in 2015.

Prior to that law’s passage, Aaron said, contractors often closed up shop or declared bankruptcy when faced with allegations of wage theft, only to reopen under another name or business entity later.

The new law has enabled the state’s labor commissioner to issue citations against larger and more prominent companies in cases of alleged wage theft.

In a highly publicized 2018 case, the California Labor Commissioner named the Cheesecake Factory jointly responsible with a janitorial services firm, saying they owed nearly $4 million to 559 janitorial workers who cleaned eight of the chain’s Southern California restaurants. It was one of the state’s largest cases of wage theft.

The state has brought similar cases against electric car manufacturer Tesla for its contractors allegedly underpaying janitors at its San Jose factories, and e-commerce giant Amazon for a contractor allegedly failing to pay overtime to its delivery drivers.

 

The power of the purse

Labor experts said it’s too soon to tell if joint liability has made it easier for the state to recover unpaid wages. State investigations of wage theft take months. And when the state cites employers, seeking unpaid wages and penalties, employers usually appeal, setting off administrative hearing processes that can take years. 

The Cheesecake Factory case is still awaiting a hearing, four years later. Advocates expect a resolution this year, Aaron said. The Maintenance Cooperation Trust Fund represented the workers interviewed in that case; its director at the time, Lilia Garcia-Brower, is now the California State Labor Commissioner.

Officials in the labor commissioner’s office in 2020 pointed to the growing complexity of liability laws for the long delays in processing the tens of thousands of individual wage claims workers file each year. 

Still, legislative staffers predicted joint liability would “almost certainly” improve labor compliance in fast food by forcing the larger businesses to monitor the behavior of franchisees. 

Aaron said that has been evident in the janitorial industry since the 2015 law change. The worker center meets with client companies that hire janitorial contractors to educate them about labor laws. 

“We find, generally, clients want to avoid the liability that contractors would bring in terms of wage theft cases,” Aaron said. “The power of the purse is real.”

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Source: The Business Journal (TBJ)

https://thebusinessjournal.com/californias-fast-food-bill-could-link-chains-to-wage-theft-and-other-workplace-violations/

By Stephen Miller, CEBS | August 1, 2022

Slower growth, lingering inflation and still-tight labor markets are factors to weigh

Salary budgets for U.S. employees are projected to increase in 2023, mainly influenced by a labor market with more open jobs than people to fill them and inflation's impact on employees' pay expectations, despite signs that the economy is slowing.

The survey was conducted in April and May 2022. In the U.S., 1,430 organizations responded.

According to the report:

• Nearly 2 in 3 U.S. employers (64 percent) have budgeted for higher employee pay raises last year, while two-fifths (41 percent) have increased their budgets since original projections were made earlier this year.
  

• Less than half of companies (45 percent) are sticking with the pay budgets they set at the start of the year. Some companies are also making more-frequent salary increase adjustments. More than one-third (36 percent) have already increased or plan to increase how often they raise salaries. Among those respondents, the vast majority (92 percent) have or will adjust salaries twice per year.

Demand for Labor Still High, for Now

U.S. gross domestic product contracted by 1.6 percent in the first quarter of 2022 and by 0.9 percent in the second quarter, as the U.S. Federal Reserve raised interest rates to fight inflation. Two consecutive quarters of slower economic activity is the technical definition of a recession.

Although some economic sectors, such as technology, have seen lower labor demand and even workforce reductions this year, as of mid-2022 the U.S. labor market overall remained tight for many employers and concern about hiring and retaining talent is a key driver of higher pay budgets, cited by 73 percent of respondents as their top factor in the WTW survey.

While attraction and retention challenges continue to plague organizations, fewer respondents expect those difficulties to be at the same level next year: 94 percent of respondents are experiencing difficulties attracting talent this year, but only 40 percent expect difficulty in 2023.

Similarly, 89 percent of companies reported difficulty keeping workers this year, but 60 percent expect those pressures to be lower next year.

Despite concerns of an economic slowdown, however, 46 percent of respondents cited employee expectations for higher increases driven by inflation as pushing pay budgets higher for 2023.

"Compounding economic conditions and new ways of working are leading organizations to continually reassess their salary budgets to remain competitive," said Hatti Johansson, research director for Rewards Data Intelligence at WTW, referring to both inflation and the rise in remote work and hybrid work arrangements.

In addition to raising pay, many companies are taking nonmonetary actions to attract talent. For example, 69 percent of respondents have increased workplace flexibility and 19 percent are planning to do so or considering doing so in the next couple of years.

In light of both a potentially slower economy and continued high inflation and talent supply challenges, "organizations need to get more creative to address attraction and retention challenges," said Catherine Hartmann, WTW's global practice leader for work, rewards and careers.

Another View of 2023 Salary Budgets According to pay data and software firm PayScale's 2022–2023 Salary Budget Survey, U.S. respondents report, on average, a planned base salary increase of 3.8 percent in 2023. Among some industries, however, base salary increases reported by respondents may surpass 4.5 or even 5 percent for their employees. These 2023 projections follow similar increase trends from 2022, where the average overall increase came in at 3.6 percent and surpassed 5 percent in some segments. The survey was conducted May-June of 2022 with responses from 2,021 employers. The data "shows a clear response to the labor market conditions of the last year," according to PayScale's analysts. "The top reason given for higher budget increases in 2023, by 85 percent of respondents, is competition for labor."

Have Pay Pressures Peaked?

New data suggests that wage growth has remained strong through the first half of 2022. On July 29, the U.S. Bureau of Labor Statistics reported that wages and salaries for private-sector workers rose 5.7 percent for the 12-month period ending in June, up from a 3.5 percent increase a year earlier. At the end of the first quarter, the annual increase had been 5 percent.

For full-time hourly employees, the Federal Reserve Bank of Atlanta tracked 5.4 percent hourly wage growth for the 12 months through June.

Relief on rising labor costs may be in sight, however, according to Joseph Briggs, an economist at investment bank Goldman Sachs. He wrote in a July 28 brief that "we expect wage growth to slow going forward," while remaining higher than in recent years.

The firm forecasts that wage growth will slow to 4.5 percent year over year by the end of 2022 and to under 4 percent by end of 2023.

"The firmness in wage growth in 2021 and early 2022 likely partially reflected one-off factors related to the pandemic that are no longer relevant," Briggs noted. Also, the breadth of wage increases has fallen in recent months, and forward-looking wage growth expectations have started to moderate.

Struggling to Make Ends Meet

Other survey data shows that nearly 6 in 10 U.S. workers are concerned their paycheck is not enough to support themselves or their families as employees look to keep up with the rise of inflation.

In an American Staffing Association (ASA) Workplace Monitor survey, conducted June 2-6 among a total of 2,027 U.S. adults age 18 and older, 58 percent of employed U.S. adults said their paycheck was no longer enough to support themselves or their families. The number was higher for Hispanic workers (69 percent) and for parents with children under 18 (66 percent).

As the cost of living increases, workers are looking to change their circumstances. Twenty-eight percent of employed U.S. adults plan to search for a new job in the next six months, while 27 percent plan to start a second job to supplement their income and 20 percent plan to ask for a raise from their current employer.

"Workers are concerned about the effects of inflation, and they're planning on taking action," said Richard Wahlquist, ASA president and chief executive officer. "Employers need to provide competitive compensation and work flexibility, and invest in employees' professional development, if they want to keep and recruit quality talent in this labor market."

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Source: SHRM - Society for Human Resource Management

https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/employers-boost-pay-budgets-despite-recession-concerns.aspx