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Employment Law/Merit Increase for Hourly Employees

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Question
Our company had a freeze on merit increases for 2012 because of the economy and business.  We will be giving merit increases to hourly employees based on performance for 2013.  Merit increases are given on an employee's anniversary date.  The issue I am finding is we have employees that are approaching their one year anniversary early in the year before  employees that will be having a two year anniversary.  Meaning a one year employee will receive a merit based on performance before an employee that has been with the company longer and has not earned a merit increase.  Are we against an employment law if we have all employees wait until their 2 year anniversary to be eligible for a merit increase based on performance?  That way we do not have ee's earning a merit before the ones that have been with the company longer.  We do not wish to retro any merit increases.  Thank you.

Answer
It is legal for you to write a policy saying that merit increases will be considered after two years of employment. You should write a policy and make sure all employees have it. My thoughts would be that you may get some flack from the less than two year staff especially if they are doing a really good job.

I might suggest that you tier the merit increases. So the one year would get maybe 2% and the 2 year would get 3%? Or some other combination so no one feels left out or discriminated against.

We do it a bit different. We give all staff a 3% (less or more) what we can afford; cost of living increase at the beginning of the year based on sales and profit the prior year. Our merit increases are for those special employees that go above and beyond. Mostly they are when new responsibilities are added and job descriptions are changed, for a promotion or a leadership role. We do not do a lot of merit increases.

We do not tie our merit increases to anniversary date and performance reviews. We noticed about 15 years ago that having the merit or wage increase tied to performance reviews caused tension and strain at the time of the reviews. The supervisor does the reviews and keeps notes all year. Than at the end of the year he reviews his employees and he proposes any merit increases to management staff (CEO, COO, CFO, HR Director) and they determine upon his recommendation which staff memebers will have merit increases for the coming year. We than write them into the budget for the coming year.  We let the supervisor know who has been approved and the employee is notified of the merit increase.

Shirley

Employment Law

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Shirley McAllister, CPP, PHR

Expertise

I can answer questions about payroll laws and payroll tax laws and Human Resource laws and agencies. I can answer federal payroll and human resource law questions and most states; I do not have a knowledge of the local taxes for cities and counties within the state. If and when I can I will try and send you the website where you can reference the answer and where you can obtain more information as well as a contact number if needed for that particular agency. Some agencies I have worked with are IRS, Department of Labor (federal and state), Revenue Canada (and provincial governments), Inland Revenue, OSHA (0ccupational Safety and Health Administration); Social Security Administration and National Child Support as well as other agencies in Payroll and Human Resources. Some Laws I am particularly familiar with are FLSA (Fair Labor Standards Act), ADA (Americans With Disabilities Act), FMLA (Family Medical Leave Act) COBRA (Consolidated Omnibus Reconciliation Act ) , QDRO's, QMCSO's, and other support orders and garnishments, USERRA (Uniformed Services Employment and Remployment Rights Act,PPA Act (Pension Protection Act of 2006, As well as most other employment type acts. I am also well versed in the Title V Civil Rights Act and the HIPAA (Health Insurance Portability and Accountability Act).

Experience

30 years in Payroll and Human Resources

Organizations
SHRM (Society of Human Resources) APA (American Payroll Association) DOLEA (Department of Labor Employers Association) CPA (Canadian Payroll Association) NAPW (National Association of Professional Women) The Mentoring Network

Education/Credentials
PHR Certification in Human Resources CPP Certification in Payroll in U.S. Payroll Administrator and Payroll Supervisor certification in Canada

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