UW Study On $15 Minimum Wage Bad News For Liberals...

Minimum wage

If there's anything that will get a healthy dinner conversation going (or get people fighting), it's the idea of the $15 minimum wage.  A better wage for core entry-level workers is hard to argue against as a reasonable person.  I want it to be true as a moderate, but my business focus always makes me wonder - is it actually a good idea?

This is the problem being a moderate.  I'll get 5-7 emails from each side on this post just crushing me for even daring to be in the middle.  Only the polar extremes get the oxygen and attention these days.

Fortunately, there's some research pouring in on the minimum wage that seems to be based on reality, not theory.  

More from the Washington Post

There’s bad news from Seattle for advocates of a $15-an-hour minimum wage law. Turns out the measure’s costs to the city’s low-wage workers have outweighed benefits by 3 to 1, according to a new city-commissioned study by University of Washington researchers. The average low-wage worker has lost $125 a month because of the higher-wage decree, the study found — even before it is fully phased in.

David Autor, a leading labor economist at MIT, told The Post the study seemed “very credible” and suggested that it might have enough “statistical power” to “change minds” in the perennial argument over the minimum wage.

Autor was wrong — not about the study’s credibility, but about its potential for moving people off their “priors.” The Seattle study met a furious counterattack from proponents of a $15 minimum. Defenders of the law came armed with a much rosier assessment of its impact by economists at a pro-labor University of California at Berkeley think tank, produced a few days before the more skeptical one came out.

It seems that Seattle’s mayor, a big advocate of the $15 minimum, had gotten a heads-up on the impending negative study and asked the Berkeley group to weigh in. Seattle Weekly called it “an object lesson in how quickly data can get weaponized in political debates like Seattle’s minimum wage fight.”

Woof.  Go dig in if you dare, but the UW study found that businesses react to the $15 wage by contracting total work hours, which results in low-wage workers in the area losing $125 per month due to the law.  That's interesting.  But if you go look at the Berkley study, you'll see the opposite.

If you really want to geek out, see this article at 538.  It talks about limitations of both studies.

My gut tells me this.  Businesses probably will restrict total hours to low-wage workers when minimum wage hikes hit because the margins for success are so thin.  The left and anyone else can shake their fist and wax poetic about evil owners trying to stay cost-neutral on labor expense.

But the critics don't risk their capital or their livelihood.  Add more labor costs to any business with limited margins and one of two things is going to happen - prices are getting raised or labor cost is getting scrutiny.  Prices are hard to raise from a competitive perspective.

I believe the UW study.  Sucks to be an owner when laws get passed by people who don't have to live with the consequences.  

Best Predictors of Higher Income Attainment in 12 Year Old Kids? Rule Breaking/Defiance of Parental Authority Of Course...

Ready for some science today?  Of course you are.  You want to be taken back to the college days where you'd figure out how to game the Dewey Decimal System to find the right cites for that lame research paper you had to write.

Actually, this cite is kind of cool - it comes from the Journal of Developmental Psychology Defiant kidand breaks down Best Predictor of Higher Income Attainment in 12 Year Old Kids... That's right, they measured a bunch of kids 30-40 years ago and tracked them.

Turns out, the rule breakers and the kids who are hard on their parents win.  Check out the full abstract below for some details...


Student characteristics and behaviors at age 12 predict occupational success 40 years later over and above childhood IQ and parental socioeconomic status.

Spengler M, et al. Dev Psychol. 2015.
Spengler M1Brunner M2Damian RI3Lüdtke O4Martin R1Roberts BW3.

Author information

  • 1University of Luxembourg.
  • 2Free University.
  • 3University of Illinois at Urbana-Champaign.
  • 4Leibniz Institute for Science and Mathematics Education.

Drawing on a 2-wave longitudinal sample spanning 40 years from childhood (age 12) to middle adulthood (age 52), the present study was designed to examine how student characteristics and behaviors in late childhood (assessed in Wave 1 in 1968) predict career success in adulthood (assessed in Wave 2 in 2008). We examined the influence of parental socioeconomic status (SES), childhood intelligence, and student characteristics and behaviors (inattentiveness, school entitlement, responsible student, sense of inferiority, impatience, pessimism, rule breaking and defiance of parental authority, and teacher-rated studiousness) on 2 important real-life outcomes (i.e., occupational success and income). The longitudinal sample consisted of N = 745 persons who participated in 1968 (M = 11.9 years, SD = 0.6; 49.9% female) and 2008 (M = 51.8 years, SD = 0.6; 53.3% female). Regression analyses and path analyses were conducted to evaluate the direct and indirect effects (via education) of the predictors on career success. The results revealed direct and indirect influences of student characteristics (responsible student, rule breaking and defiance of parental authority, and teacher-rated studiousness) across the life span on career success after adjusting for differences in parental SES and IQ at age 12.

One surprising finding was that rule breaking and defiance of parental authority was the best noncognitive predictor of higher income after accounting for the influence of IQ, parental SES, and educational attainment. Given the nature of our archival data, the possible explanations are rather ad hoc and our exploratory results need to be replicated.

For instance, individuals who scored low on Agreeableness were also shown to earn more money (Judge, Livingston, & Hurst, 2012). One explanation Judge and colleagues (2012) gave for this finding was that it might be because of the fact that such individuals value competition more than interpersonal relations and therefore want to advance their interests relative to others. Another explanation might be that individuals with higher levels of rule breaking and defiance of parental authority also have higher levels of willingness to stand up for their own interests and aims, a characteristic that leads to more favorable individual outcomes (Barry & Friedman, 1998)—in our case, income. This may be one of the reasons why defiance of parental authority plays a role in determining income—students who show higher levels of rule breaking and defiance are more likely to engage in negotiations about earning and payment (see Judge at al., 2012) and fight more strongly to achieve personal benefits. We also cannot rule out that individuals who are likely or willing to break rules get higher pay for unethical reasons. For instance, research in the field of organizational psychology showed that employees invest in unethical or deviant workplace behavior when they are not satisfied with their income and when they have a high level of love of money (Tang & Chiu, 2003). Thus, this kind of behavior might in turn lead to higher income. Nevertheless, further research is needed to better understand the construct and its mechanisms.


KD NOTES - My favorite parts of that abstract are as follows...

--individuals who scored low on Agreeableness were also shown to earn more money

--students who show higher levels of rule breaking and defiance are more likely to engage in negotiations about earning and payment

--We also cannot rule out that individuals who are likely or willing to break rules get higher pay for unethical reasons (whoops!)

The kids are alright.  It's just that some of them are going to get paid based on how they are wired, and some of them aren't.  Embrace the difficult child in your household, people. 

The Perils of Your Company Culture Becoming Sales-Focused (Above All Else)...

Nothing happens without sales.  Treat your salespeople right, because unless they kill something, nobody eats.

For the reasons stated above, it's not wrong for the leaders of your company to want to transform your culture into a sales machine.  The problem happens when people who weren't hired to sell suddenly find themselves with quotas but no idea of what to do next.

I was reminded of the perils of leaders trying to transform a decent culture into one that is purely revenue-focused by two things over the holiday weekend.  First, this from Fast Company on the Tesla acquisition of one-time solar energy darling SolarCity:

If there was one sign that the company was flying too close to the sun, it was, many felt, an extravagant sales-team huddle in Las Vegas around March 2015. In a scene straight out of HBO’s Silicon SolarCity.IPO_1Valley, Barnard, then SolarCity’s chief revenue officer, burst onto the stage in front of Lyndon, Peter, and 1,300 employees (Musk would arrive later) at Hakkasan nightclub, rapping over Nicki Minaj and Drake’s hit “Truffle Butter” while surrounded by provocatively dressed dancers. At another point, he appeared dressed as Helios, the Greek sun god, wearing a green suit of armor designed by the same people who created the Iron Man costume for that movie. “The party was cool,” recalls hip-hop artist Chingy, who also performed. “Lots of energy, a beautiful crowd. We shined like the sun.” There was, after all, much for them to celebrate. SolarCity was by then the clear industry leader, owning a third of the residential market and handling more installations than its next 50 competitors combined. (Barnard explains that he was only trying to rally his troops, and strongly denies that the culture became bro-y. “I don’t tolerate that bullshit,” he says.)

OK - that's fun, but what follows shows how the grind to create revenue and keep growth rolling quarter/quarter and year/year can result in less than stellar sales practices:

The company’s growth rate—it was hiring 100 sales reps a week to help hit aggressive targets—led to some dubious tactics when it came to marketing SolarCity’s zero-money-down concept. Many sources felt that the drive to hook customers often eclipsed any concerns about whether they would follow through with the lease purchase. “You had all these poorly trained reps basically going, ‘Just sign here! Don’t worry, you can cancel any time!’ ” says a former sales director. “People were treating it like signing off on iTunes’ terms and conditions.

The company’s average cancellation rate increased to 45% or higher; its door-to-door sales team saw rates of 70%, multiple sources say. (The SEC is reportedly probing the lack of public disclosures around cancellation rates in the solar industry. A spokesperson for SolarCity says that rates have improved, and that the company reports on “installed assets,” rather than “preinstallation cancellation rates.”) With competition in the solar space increasing, SolarCity engaged in a pricing war with many of its rivals, a race to the bottom that hurt deal profitability.

If there's one thing that seemingly happens a lot when companies/employees are under incredible pressure to sell, it's the emergence of low quality/borderline fraudulent sales that might not ever generate revenue as outlined above at SolarCity.

I wrapped up the holiday week by listening to some former Wells Fargo employees talk about the account fraud that happened at the company, with over 2.1 million fake accounts created by associates at the giant retail bank.  To hear my dinner companions tell it, everyone in the company knew it was going on. Find a good rundown of what happened at Wells Fargo here - and here's a great snapshot of what can go wrong when you say EVERYONE NEEDS TO BE IN SALES at your company:

“Cross-selling,” it’s called, and virtually all banks want to do more of it. Once a customer opens a checking or savings account, maybe he or she would also like an auto loan or overdraft protection or a credit card. The more products a customer has with a bank, the more money the bank makes and the less likely the customer is to leave. That’s why all banks cross-sell. But arguably no bank has ever done it with the fevered intensity of Wells Fargo.

Training in “questionable sales practices was required or you were to be fired,” a former employee tells Fortune. “We were constantly told we would end up working for McDonald’s” for not meeting quotas, a former branch manager told the Los Angeles Times in 2013; another former branch manager said employees “talked a homeless woman into opening six checking and savings accounts with fees totaling $39 a month.” 

The message was clear to everyone in the retail bank: “The route to success was selling more than your peers,” the board’s investigation found—not profitability or customer satisfaction, but simply selling more products to each customer. Everyone knew the goals were sheer fantasy for many branches and employees. At some branches not enough customers walked in the door, or area residents were too poor to need more than a few banking products. Bank leaders called overall quotas “50/50 plans” because they figured only half the regions could meet them. Yet no excuses were tolerated. You met the quotas or paid a price.  The predictable result: fake accounts.

Ugh. Companies can't succeed without sales.  But leaders who are trying to transform from product/service cultures to become sales machines at all costs generally fail.  More often than not with jail time being possible/likely for someone involved.

If I Were Starting A Union, Here's What I'd Do...

I'm spent a lot of time over the last week thinking about the challenges of the budgeted merit increases - you know the drill - 4% across the board, and you need to get "pay for performance" out of that.  Which got me thinking about this ...


If I Were Starting A Union, Here's What I'd Do...I'd rip a page from the player's unions in the major sports leagues and focus my bargaining on the establishment of a salary cap.

Once the cap was established as a percentage of company revenue, the deal would be pretty simple from an economic perspective - members of the union would get more cash as revenue grew, and they'd be at risk if revenue didn't grow or decreased (I'd have to figure out how new headcount impacts that - there would have to be some way to protect a certain % of growth for the incumbents).

Of course, membership drives for my union would be challenged - mainly because the majority of workers in America have no interest in that kind of risk, or at least see little value in the upside. They'd rather take their 3% annually.

Which means I'd have to attempt to unionize high performers and Linchpins only.  Of course, that's problematic since this group really doesn't need representation and can increase their compensation on their own, both within the same company and via the free market.

Crap.  Back to the drawing board...

Alleged Pay Discrimination at Google Makes Marc Benioff and Salesforce Look Amazing...

Back in late 2015, I reported on proactive moves by Salesforce to do pay equity increases across its workforce to eliminate any and all gender pay issues, job by job. Here's a rundown from the post:

"In a panel at a conference organized by Fortune last week, Marc Benioff, the CEO of the cloud-based software company Salesforce, said that he recently ordered a review of all 17,000employees’ salaries to see if female employees’ pay was in line with those of male employees doing similar jobs. According to Fortune, Benioff said that the company is spending about $3 million extra this year on its payroll to make these adjustments. “We can say we pay women the same that we pay men,” he said the conference. “We looked at every single salary.”

Salesforce has declined to clarify the $3 million figure or provide further details—the size of the average adjustment, how many employees saw their salaries changed, and how they reacted—but is going to put out a report with more information next year."

At the time, I thought the move was brilliant, as it changed the conversation about workforce diversity to one of workforce equality - an equal goal that once achieved, was bound to change the narrative related to how much slack the world was going to give Salesforce for having some work to do on the diversity front.

Well, here's another reason to go for pay equity if you're a company like Salesforce - to keep the DOL from knocking on your door and playing hardball, like they just did at Google.  

"In their efforts to bring wage equality to Silicon Valley, government officials have accused one of the tech industry's anchor firms of large-scale gender discrimination.

According to the U.S. Department of Labor (DOL), available data suggests that women who work at Google suffer from "systemic compensation disparities" compared to their male peers. As part of an ongoing lawsuit, the DOL alleged that the company, a frequent recipient of federal contracts, has violated federal law by discriminating against female employees in the salary department.

In recent years, Google has reportedly been well averse to sharing such data with the DOL, which seeks to compel the company to disclose wage and other information under federal employment laws. Testifying in San Francisco on Friday, DOL regional director Janette Wipper told the court that the government had uncovered "systemic compensation disparities against women pretty much across the entire workforce" in its investigation of available company data from 2015, The Guardian reported."

The fact that Google's taken this DOL charge show's how brilliant the 2015 move by Salesforce and Benioff was.  Not only did they change the narrative related to diversity (important, but so it equality, people!), they didn't get sued.

Did Google have the money to do something similar to the Salesforce move on pay? Of course they did. But leading means you're proactive, even when you don't have to be.

Well played, Salesforce.  Good luck, Google.  You'll likely end up making the same equity increases Salesforce did, but it will look forced and you won't get credit for leading.

VP of Equality Is The Rationalized Replacement for VP of Diversity at Salesforce...

Capitalist Note - I originally posted this a couple of weeks back over at Fistful of Talent. While some of you read both FOT and the Capitalist, not all of you do - so I'm reposting here. Take a look, interesting stuff from Salesforce as they seek to change the narrative from Diversity to Equality.  Some will be frustrated, some will think it's brilliant. Here's what I know - Salesforce is playing OFFENSE, not defense, on this issue.

If you don’t like the answer, you can always change the question. Especially if you have money. Lots of money.

There’s a lot of companies across America that struggle with Diversity hiring.  They’re under-utilized in multiple job families, and even as they try to attract diverse talent, it hasn’t gone great.  After all, not everyone wants to work for your company.  Throw in the fact that you can’t pay new hires anything they want without messing up your comp equity, and most companies don’t make the progress they’d like to.

So Salesforce did what any company with loads of cash would do.  They changed the answer, and thus the question.  Turns out the answer isn’t more DIVERSITY, it’s more EQUALITY.

Confused?  You’ll get it soon. More from TechCrunch:

“It’s important for tech companies to have at least one voice at the senior leadership table that advocates for issues around equality, diversity and inclusion. Unfortunately, that’s just not the case for many companies in the tech industry. Salesforce, a company that said a year ago that a major focus for it was “the women’s issue,” recently became an exception to the rule with the hiring of Tony Prophet, its first-ever chief equality officer. Two weeks into his role, Prophet sat down with me to chat about Salesforce’s evolution from a focus on diversity and inclusion to an overall focus on equality. 

“The notion of being chief equality officer — now that was very thoughtful and deliberate on Salesforce’s part and on Marc’s [Benioff] part versus being chief of diversity or chief of inclusion because you can have a diverse workplace or a diverse culture in many parts of America that are very diverse but are hardly inclusive and there’s hardly equality,” Prophet told me. “We want to go beyond diversity and beyond inclusion to really achieve equality.”

Translation?  Tech companies have huge issues finding enough females and minority to work at their company, especially in the bay area.  If you can’t figure out diversity but can afford to achieve equality when it comes to pay, odds are people are going to be less critical of you.

Earlier this year,Salesforce chairman and CEO Marc Benioff revealed that his company spent about $3 million in 2015 to equalize compensation across the company, closing the tech giant’s gender pay gap.

Here’s a chart showing Salesforce’s workforce diversity (email subscribers click through for graph):

Salesforce diversity

Translation – The company still has a lot of work to do, but by changing the conversation to equality, not diversity, they’ve effectively changed how they’re measured by the outside world.

I’m not saying diversity hiring in tech isn’t important. I am saying that Salesforce is working towards a related, equally important goal and now will be considered in a different light than other major tech companies, whom I would expect will follow suit soon enough.

If you can’t find enough diverse hires, it makes sense to ensure the ones you have (including women) are paid on equal footing to everyone else.

Then you obviously want to get your message out.

At Salesforce, that message includes the fact they’re changing the conversation from diversity to equality, with an emphasis on pay equity.

Again, I’m not saying either approach is right – but Salesforce has created a master stroke to relieve some of the diversity hiring pressure and is going all in, with first mover advantage and everything that comes with it.

I’m a cynic on most things.  Even the cynic in me has to respect how Salesforce is controlling the narrative here.

Glassdoor Just Gave You A Gift, HR. It's In a Brown Paper Bag and on Fire Just Outside Your Door...

Ah yes, Glassdoor.  As people like to say when they're in relationship of questionable health - it's complicated.

Many of you saw the new tool Glassdoor rolled out last week, but if you didn't, here's your notification since you missed the PR blitzkrieg.  Glassdoor is launching a tool called "Know Your Worth" designed to (in their words) help US Workers find their current market value.  In the interest of balance, here's Glassdoor's description:

For anyone who has ever wondered if they are being paid fairlyGlassdoor, the leading jobs and recruiting marketplace, has launched a new, free tool that uses patent-pending technology to calculate the Know-your-worth-desktop-exampleestimated market value, or earning potential, of an individual, right now, based on characteristics of his or her current job, work experience and the local job market.Know Your Worth by Glassdoor, currently in beta, is designed to not only help people determine if they are being paid fairly, but also whether they should attempt to negotiate their current salary and/or explore better paying jobs.

Know Your Worth uses sophisticated data science and machine learning algorithms that leverage millions of salary reports shared by employees on Glassdoor, while analyzing real-time supply and demand trends in local job markets, and typical career transitions of people doing similar work. Each person’s market value, and pay range, is unique to them and private, and will be recalculated weekly and tracked over time.

To use Know Your Worth, an individual simply needs to enter a few basic details, including their current job title, employer, current salary, location and years of relevant work experience.  When enough relevant data exists, Glassdoor uses its proprietary Know Your Worth algorithm to instantly calculate the individual’s personalized market value, which is the estimated median base pay he or she could earn in their local job market, right now. To make it easy to monitor over time, Glassdoor plots each individual’s 12-month market value on a chart, and compares it to the median pay of similar workers in their local market.

Most of you who read this space are HR or Recruiting pros/leaders. That means a couple of things.  First, you've dealt with plenty of salary issues in your time and generally have a take on which people in your organization might be undervalued or overvalued in their role.  You've also probably been solicited by Glassdoor to become a customer, with the pitch being they can help manage your company reputation or develop candidate flow as Glassdoor seeks to monetize it's business by becoming a new age job board.  Some of you have signed up. Some of you haven't. I get it.

But becoming a new age job board is where the rub is. To monetize, Glassdoor has to have someone pay for the service.  That's you, the HR or Recruiting leader.

And that relationship is becoming increasingly complicated.

First, let's call the new service out for what it is.  Glassdoor needs to keep your employees coming to the site.  The employee eyeballs/attention are really the product.  For a long time that's been employee reviews.  While this post is critical of Glassdoor's latest direction, the company is intelligent and worthy of our scrutiny.  Evidence of that intelligence is the fact that when employees create reviews, they're given the opportunity to provide their salary.  Glassdoor's been aggregating salary data for a long time.

While that salary data is growing in accuracy, it's far from perfect. But that's not going to stop Glassdoor from launching Know Your Worth and showing HR and Recruiting Pros how they really feel about them.

How does Glassdoor really feel about HR and Recruiting leaders?  Let me walk you through a couple of components to the Know Your Worth launch/product specs.  You tell me how they feel about you:

1. Remember when Glassdoor told you - both customers and non-customers - that promoting company reputation/reviews to your employee base was important?  I agree with that notion and have wrote about it before.  You bought into it (rightfully so) and with or without Glassdoor's help began asking employees to consider writing reviews of your company.  Guess what? Glassdoor just sent an invite to all reviewers (aka your employees) telling them you might be underpaying them and they should fact check whether they should trust your company or not.  All of them.

If this movie had subtitles, that scene would say, "Thanks for ramping up our network, suckers."  But I digress. Back to evaluating the Know Your Worth launch/product specs...

2. The Know Your Worth product is incomplete, but that won't stop Glassdoor from telling your employees it gives you a 100% accurate read. True story here - my company's business is recruiting, and our core position has total comp that's 50% base and 50% commission. We have employees that earn a very good living working for us.  So when I got the aforementioned email asking me to Know My Worth, as an HR leader I wanted to know what employees in our core positions would see. Good news!  When I played the role of a recruiter at our company, Know Your Worth gladly accepted my commission target as part of my total compensation potential. Bad News! Know Your Worth ignored that input when it evaluated if that position was compensated fairly, evaluating the base salary only with no mention of the input of commission that I made, or qualifier that they weren't evaluating the information in its full context I'll talk about shortly - total comp or total rewards.

Translation - Thanks for helping us grow our database to a larger degree by putting all those inputs in, kids!  But all we're prepared to give you is an evaluation of your base salary. And we'll tell you your underpaid by 6K on a salary of 50K even though your target total compensation is 85K, and many in the same position in your company exceed that total target compensation. Note - I used a Salesforce Account Executive in San Francisco to test the outputs and analysis again, entering total comp information.  Same result, analysis of base salary only.  

3. But Wait! Glassdoor shows they care about HR and Recruiting Leaders by providing a whitepaper during the Know Your Worth launch campaign called "Glassdoor's Guide to Salary Conversations".  This proves they're here to help you, HR and Recruiting leaders!  They care so much about you they've created the guide to help your line managers navigate the tough conversations the Know Your Worth campaign is sure to generate. You know the conversations -the ones caused when Glassdoor emailed every employee who has created a review on your company to question their compensation - the same reviews that were generated using Glassdoor templates and communication tools you paid Glassdoor to provide when you said yes to being a paid corporate customer of Glassdoor.  Wow.

But I again digress.  Glassdoor is showing they care by creating this guide.  Until you open it and see the following sage advice (email subscribers click through to see image from guide):

Glassdoor Pro Tip

PRO TIP FROM GLASSDOOR! If your employees are in an uproar about their compensation due to the Know Your Worth campaign, you should get your s##t together and get a total rewards and compensation strategy together.  You know, like the one Know Your Worth fails to evaluate, even when an employee gives it their entire picture of total comp.  

Translation - Communication of total comp is your responsibility.  It's only Glassdoor's responsibility when it benefits them - like when it's time to lecture you, not when it's time to drive eyeballs to the site and continue to collect profiles, page view and free data generation from your employees. 

Final Notes: I'm on record for believing in Glassdoor, more specifically the fact that the review economy is a reality and HR/Recruiting leaders have to acknowledge the presence/power of Glassdoor and have a strategy to engage.

But Glassdoor isn't being a partner with launches like Know Your Worth.  They're attempting to drive more eyeballs, build a database and generally reach critical mass to do what's required to maximize their primary objective - get a slice of your recruiting budget.

All Glassdoor had to do in the launch of Know Your Worth is have better information on total compensation and present it to employees using this tool.  That data is available by partnering with a professional compensation firm.  If that wasn't possible, they could provide warnings related to total compensation that help employees understand the limitations of the data being presented.

Put another way - Glassdoor's business on the employer side is to sell you things like reputation management and job postings.

Glassdoor's business on the EMPLOYEE side is EMPLOYEE DISSENT.  And in that regard, business seems to be good.

4 Simple Things for HR Pros To Remember as Overtime Laws Change...

As many of you know, new overtime rules under the Fair Labor Standards Act (“FLSA”) are coming. Given the basic economics of the workplace, the new rule—which raises the salary threshold under which an employee is entitled to overtime—is just as likely to create less work for individual employees as it is to increase the amount of overtime American employees collectively earn.

The main change in the FLSA rules, effective this Dec. 1 is an increase in the minimum weekly salary to the 40th percentile of weekly earnings for full-time salaried workers, based on the Bureau of Labor Statistics (BLS) data. Under the new rule, anybody making a salary of less than $47,476 ($913 a week) will automatically qualify for overtime pay when he/she works more than 40 hours a week. This is twice the previous overtime pay threshold of $23,660 a year, which had remained unchanged for more than a decade.

Employers need to consider the rule, its impact on labor costs, and the best way to respond.

With that in mind, here's 4 simple things you need to remember as you'll likely have people not used to being hourly, working past 40 hours:

--You can and probably should ask folks to get overtime pre-approved.  It's messy, because you've asked a lot of these people on the professional and managerial exemption to run their own shop and desk.  Now they're hourly, and we're telling you to ask them to get OT approved.  Too bad - if you want to get fiscal control, asking people to pre-approve OT is something you have to do.  The good news this puts inherit pressure on them (assuming OT is not a preferred outcome for your company) to be more productive with the hours they have.

--When non-exempts work OT without approval, you're required by law to pay them.  Doesn't matter if you have pre-approval as you're process or not, if they work past 40 hours, you have to pay them - even if they didn't get the OT approved.  The tricky part here is why you have to pay them, you can put them in progressive discipline for not following the OT pre-approval rule you have.  So if there's a problem with pre-approval, pay them and figure out when to send the message.

--Remote work by a lot of your professional workers under the threshold just got trickier.  It's true - the time they reply to work emails outside of work needs to be compensated.  So you'll need to tell them that and set the expectations on how you want them to handle that.  Good times.

--Most professional grade workers still want to be exempt rather than non-exempt.  Sure they want to get paid, but they'll hate the hour counting.  Keep this is mind as you communicate what's up... And if they hate it, have them write a letter to their congressman.  

Remember some of these basic things, be open and honest in your communication with employees moving from salary to hourly status and you'll be fine.  Good Luck!

Here's the Best Minimum Wage Increase Idea I've Ever Heard...

Can't take credit for this but it's gold - A recent episode of the Recode/Decode podcast featuring Bradley Tusk, the 3rd Party Legal Counsel for Uber, included a great idea for a minimum wage hike Tusk thought would bring both sides to the table:
1. Raise the minimum wage to $15-20 per hour. Min wage
2. Figure out the delta to business and give tax credits that directly give back the money to businesses.
3, This was Tusk's logic - Citizens get most of every dollar as opposed to inefficient government services, where they might see ten cents on the dollar if they're lucky.
4. The theory is that people who need social services won't need them at $20 per hour, so tax credits become the way to force/get both sides to the table.
As a moderate, I loved the idea of this solution.  Will it ever happen?  Probably not - The democrats who have pushed for the increase can't deal with the thought of government losing control of increased funding, and the GOP who has traditionally hated the idea can't give up on the free market narrative to look at a solution that makes senses.
Small business owners? They'll be stuck in the middle with super high turnover and impossible recruiting challenges.
A great idea that will likely never see the light of day.  That's a shame.