Human Resources: Min Wage, Exempt Employees & COLA
Maxim is a large, regional department store chain located on
the West Coast. As the store manager of the Portland, Oregon, store, you are
responsible for overseeing all operational aspects of the store, including
making decisions about how employees will be paid. Maxim gives you a great deal
of autonomy in deciding how to run the store, one of the factors that attracted
you to this particular assignment. One of the first tasks you have decided to
do is evaluate the wages being paid to employees. This task is particularly
important given the high turnover rate the store experiences. Comments made by
exiting employees suggest that the primary reason for their decision was the
lower than market pay for their jobs. Sales associates currently make $8.50 per
hour. Department supervisors make $14.25.
1. What is the current federal minimum wage and what
employees are entitled to receive this wage? Investigate whether or not the
state in which your store is located has a higher minimum wage than the federal
minimum wage.
2. You know that some of your employees are classified as
exempt and some as nonexempt. Find out what these terms mean and how the
decision is made about which employees are exempt and which are nonexempt.
According to these guidelines, are your sales associates considered to be
exempt or nonexempt employees?
3. The store has a policy of periodically giving
cost-of-living adjustments (COLAs) to all employees. Search the Web and find:
(a) what cost-of-living salary adjustments are usually based on, and (b) what
is the most recent consumer price index (CPI)? How does the West CPI compare to
the national CPI? Based on this information, what COLA do you propose for the
store in Portland?
4. You are not sure how the wages of your store compare with
wages at similar establishments in town. Locate wage data for the area in which
your store is located. You want to find information about sales associates and
retail managers. How do the local wages for both jobs compare with what Maxim
is currently paying? Summarize your results and make a recommendation as to how
much Maxim should pay for both jobs.
