Human Resources Management for Public and Nonprofit Organizations

Compensation 271

to pay salaries high enough to allow them to recruit and retain talented

executives who will help an organization operate its programs effectively.

Manzo (2004) notes that the real salary scandal is not that executives of

nonprofi ts are paid too much but that most nonprofi t employees are paid

too little.

Deciding what the compensation of executives should be is diffi cult.

Executives in public, nonprofi t, and for - profi t organizations may possess

the same levels of responsibilities, administer similar-size budgets, and

supervise similar-size staffs (public, nonprofi t, and for - profi t hospitals, for

example).

All organizations must be careful that their executive salaries do not

come at the expense of lower - level employees, like the examples cited later

in the chapter regarding the CEO of

Parent/Child Inc. and the KCMC

Child Development Corp. All employ-

ees should be paid fair wages. Paying

low salaries can be self - defeating. After

two or three years, employees leave,

and agencies need to recruit and train

new staff incurring signifi cant costs.

Federal Laws Governing Compensation

All public and nonprofi t employers are required to comply with two federal

laws, the Fair Labor Standards Act (FLSA) and the Equal Pay Act.

The Fair Labor Standards Act

The main provisions of the FLSA, enacted in 1938, are minimum wage,

overtime pay, equal pay, and child labor rules. On July 24, 2007, the federal

minimum wage was raised to $ 5.85 an hour, to be increased 70 cents each

summer until 2009, when it will reach $ 7.25 an hour.

The FLSA requires that employers keep records of the hours that

employees have worked. Its overtime provision requires that employers pay

one-and-one - half the regular rate of hourly pay for each hour worked that

exceeds forty hours per week.

The FSLA divides employees into exempt and nonexempt workers.

Exempt employees are not covered by the overtime provisions. They can

be expected to work more than forty hours per week without additional

Paying low salaries can be

self - defeating. After two

or three years, employees

leave, and agencies need to

recruit and train new staff

incurring signifi cant costs.