Acme Manufacturing

Abstract

This paper evaluates the inequity of the pay rates among salaried employees at Acme Manufacturing, the decisions the president, Mr. Black, is faced with and how the company may have found itself in the current situation.

Keywords: job evaluation, modified ranking method and Equal Pay Act

Acme Manufacturing, a family owned business, is located in a small eastern Arkansas town and staffs approximately 250 individuals, making them the largest employer in the town. Mr. Black took over the role as president of Acme, replacing Bill George, who was the founder and former president providing 35 years of service to the company.

Shortly after joining Acme, Black noticed there was considerable inequity in the pay structure for salaried employees and decided to investigate the matter. Through discussions with the human resource manager and a closer examination of the salaried payroll, his suspicions were confirmed that in fact there was inequity among the salaried employees. Based on his findings, Black decided to hire a compensation consultant company to conduct a job evaluation for the 25 salaried jobs and use the modified ranking method to evaluate the jobs. The modified ranking method ranks each job relative to all other jobs and requires obtaining job information, selecting and grouping jobs, selecting compensable factors, ranking jobs, and combining ratings.

The results of the job evaluation showed that the HR director and three female supervisors were being underpaid relative to comparable male salaried employees (Dressler, 2011, p. 418). The HR director agreed to take a salary increase and not ask for any back pay, but Black still needed to deal with the three other female supervisors and do it in way that would hopefully prevent them from taking the case to the local EEOC office, as well as not causing alarm to the male supervisors.

Based on the findings of the job evaluation, Acme is in violation of the 1963 Equal Pay Act, an amendment to the Fair Labor Standards Act, which states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for doing roughly equivalent work (Dressler, 2011, p.390). Therefore, Black should increase the three female supervisors’ salaries immediately and discuss the situation with them.

Many start-up companies begin with the goal of growing into a