Unlike many industries that pay employees the same rate of pay regardless of work performed or a defined rate for all employees working the same job (e.g. Job A pays $15/hr for all employees), in the manufacturing industry there are several factors that need to be evaluated to ensure the correct rate is used for each hour worked by an employee in order to avoid employee disputes and possible Department of Labor violations.
A wage determination is a wage decision made to assign the appropriate rate of pay to employees in order to comply with contract-mandated rates based on the union, job, or location where work is performed.
Example of a multiple variable wage determination scenario:
On Monday an employee works 8 hours on Job A on Team 999 at the New York City plant. The rate for that role is $32/hr.
On Tuesday the employee is asked to fill in as a Supervisor at a different plant in New Jersey. They work 8 hours as a Supervisor on Job A with Team 888 in New Jersey that pays $45/hr.
On Wednesday the employee comes back to the New York City plant but works Job B with Team 888 that pays $37/hr.
On Thursday the employee stays in New York City but splits their day on Job A with a new team 777 paying $33.50 in the morning, and then in the afternoon is asked to work with a special piece of equipment that pays them another $2.50/hr, so they get $36/hr for those 4 hours.
On Friday the employee takes a vacation day that the company pays at the blended average of all earnings from the last 30 days.
To add further complexity, wage determination may also include enforcing the highest wage rate policies of paying the employee the highest rate from a contract rate (like their union rate) or their base rate. The highest wage rate policy is designed to protect employees by ensuring they will get the most favorable rate of pay even if asked to perform a task that is below their normal rate of pay.
Most Time and Attendance Systems cannot handle the complexity of assigning wages based on multiple wage-decision factors.
IDI can help automate wage determinations.