Federal Laws as Help and Hindrance

Human Resources: Employment Laws and Employee Rewards

Law dictates some basic elements of business relationships and wages are no exception. Employers must adhere to certain minimum requirements, particularly if they wish to do business with the federal government. These laws both help and hinder a company's ability to attract, motivate and keep employees.

How Laws Affect Wages (Specific private sector examples)

Laws govern some parameters of some basic elements in the employer-employee relationship and one of those basic elements is compensation. Perhaps the most obvious example is the minimum wage of at least $7.25 and the overtime pay of 1 1/2 times the employee's normal hourly rate for every hour above 40 hours per week (except for exempt employees), both mandated by the Fair Labor Standards Act (FLSA) (Business & Legal Resources, 2014). Furthermore, some states require an even higher minimum wage be paid (Business & Legal Resources, 2014). Huge corporations like McDonald's, Corp. rely on a very large work hourly force that is paid the federal minimum wage of $7.25/hour; however, there have been recent employee protests that the current minimum wage is inadequate to meet their basic needs (Rosenthal, 2014). In fact, McDonald's workers were urging $15.00/hour minimum wage but McDonald's understandably resisted and is able to rely on the $7.25/hour federal minimum wage. Recently, however, McDonald's CEO has stated that McDonald's will be able to manage an increase in the federally mandated minimum wage to $10.10/hour (Rosenthal, 2014). In this case, the FLSA directly impacts the wages that McDonald's Corp. must pay to thousands of its hourly employees.

The FLSA is merely one example of laws affecting wages. For example, the Davis-Bacon Act (U.S. Department of Labor, n.d.), the Walsh-Healey Public Contracts Act (PCA) (U.S. Department of Labor, n.d.), and the McNamara-O'Hara Service Contract Act (SCA) (U.S. Department of Labor, n.d.), all give the federal government leverage in controlling wages paid to employees: if a company wishes to do business with the federal government -- even indirectly -- and the contract is over a certain amount of money, the company must adhere to certain federal wage standards. Boeing Company, for example, which contracts with the government for a great deal of business, is scrutinized by the government and must comply with all the above-mentioned Acts (POGO.org, 2014). If Boeing violates the provisions of those laws, it can be cited, fined and could even lose the contract with the government (POGO.org, 2014). In this way, the government can force companies like Boeing to treat its employees fairly: if the company wants to do business with the government, it must adhere to the laws, allow scrutiny by the government and make changes directed by the government (POGO.org, 2014).

Finally, laws such as the Equal Pay Act (Business & Legal Resources, 2014) and the Lily Ledbetter Fair Pay Act (Business & Legal Resources, 2014) force companies to avoid discrimination in pay based on gender and give employees ample time to assert their discrimination claims. The Equal Pay Act requires equal pay for substantially equal work, regardless of gender (with some exceptions) (Business & Legal Resources, 2014); furthermore, the Lily Ledbetter Fair Pay Act ensures that the applicable statute of limitations governing the time in which the claim must be brought is reset with every paycheck (Business & Legal Resources, 2014). Whether or not a corporation is doing business with the federal government, the corporation must adhere to those requirements; failure to do so can result in being cited, forced to retro-compensate and even fined. Our friend, Boeing Company, has also been scrutinized, cited and fined for violations of these Acts (POGO.org, 2014). The sum total of all these laws affect wages by forcing employers to pay a minimum wage, regardless of gender, pay a higher rate of overtime under certain circumstances, allow scrutiny of their businesses by the government and suffer penalties for violations.

b. Do Laws Interfere with or Complement an Employer's Goal of Using Wage and Salary (Pay) Plans to Recruit, Motivate and Retain Employees?

Laws both interfere with and complement an employer's goal of using wage and salary (pay) plans to recruit, motivate and retain employees. Due to the above-mentioned laws, employers have guidance on the minimum standards to which they must adhere in attracting employees, motivating them to work and keeping them with the company. McDonald's Corp., for example, was able to rely on its adherence to the federal minimum wage to withstand extensive protests and has signaled its willingness to raise its own standards when federal standards are also raised for minimum wage (Rosenthal, 2014). On the other hand, laws also tie the hands of employers in recruitment, motivation and retention of employees. Despite the fact that Boeing Company is a huge international company, if it wants to do business with the federal government, it gives up a lot of its freedom to structure wages and salary plans to attract the cream of the workforce. In order to obtain and keep lucrative federal contracts, Boeing must adhere to federal standards for some structuring of its pay packages, must allow scrutiny of its employee compensation, must sometimes endure citations, corrections and fines; furthermore, Boeing must keep extensive records to comply (POGO.org, 2014). All these ways in which Boeing must submit to federal standards in order to do business with the federal government interfere with the company's freedom to structure pay packages that will attract, motivate and retain employees.