Thinking of Giving Title Changes In Lieu of a Raise in this Recession?

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While tough economic times continue, companies everywhere are creating innovative solutions to keep their loyal staff happy. As the company pocketbooks don’t have the spare cash for generous raises, many employers are turning to title promotions with slight raises as a way to show their appreciation. And while there’s nothing wrong with advancing a competent person, employment law experts warn companies to maintain integrity when giving promotions and be aware of potential legal risks associated with job title inflation.

"If you’re inflating job titles, you’re breaking down traditional boundaries in the duties category. While employers may have good intentions, if you start inflating titles, the titles themselves don’t reflect the duties of the position and required expertise. It also can become confusing, disorganizing and difficult when striving to maintain job classifications and proper salaries when the economy bounces back – including dealing with inaccurate job descriptions with misleading duties requirements, which can converge to cause difficulty separating exempt and non-exempt employees," said John K. Skousen, Partner, Fisher & Phillips LLP.

John K. Skousen, partner at the Irvine, Calif. office of employment law firm Fisher & Phillips LLP and an expert on performance management issues, has extensive experience representing a wide variety of regional and national companies with respect to all aspects of employment litigation. His specialized practice area includes wage and hour law and class-action litigation, making him the ideal representative to lend insight on what employers need to know in regard to latest trends in job title inflation and the potential negative consequences facing companies that engage in this practice.

Skousen offers the following issues to consider before implementing title changes in today’s economy:

1. Steer clear of negligently promoting – To give someone a responsibility he/she is not capable of doing – or a title that suggests something he/she is not really doing – is very risky. This may occur inadvertently when "promoting" by consolidating two or more positions into one job, leaving an employee unable to perform certain new functions in the glorified job. Employers are largely liable for their employees’ actions and if they haven’t trained them properly, or are negligently promoted, the company is responsible for that action. Skousen advises employers to avoid the temptation to change titles if it misstates what the person actually does.
2. Avoid the temptation to give overworked staff title changes – In a recession, people get more responsibility and jobs are combined. Instead of two employees working 40 hours per week, companies may have one person in that role working 60-hour weeks. Risks include increased turnover due to injuries or job turnover. Skousen advises employers to be smart and evaluate the risks of spreading out more work and responsibility to fewer employees just to "save money."
3. Don’t play the name game – Many companies started calling staff "associates" several years ago, and it’s lost much of its value today. Similarly, "consultants" are no longer sophisticated business consultants making $200,000 per year giving sound advice to companies. Now everyone’s a "consultant" instead of a "salesman" or other appropriate title. Ensure the reputation of your team’s qualifications are maintained, and that management titles remain respected.
4. Ensure exempt and non-exempt accuracy – Employers giving supervisory title changes may also assume they can shift a non-exempt employee to exempt status. However, if the actual job duties or responsibilities do not change much, there may be legal ramifications for misclassification and a potential lawsuit against the employer for unpaid overtime.
5. Remember past lessons learned – Inflating job titles is nothing new. In fact, similar practices took place in the 80s during that recession as employers attempted to compensate overworked and loyal employees during a tough economy. In addition, Skousen compares job title inflation to grade inflation in education, "If everyone has an ‘A,’ how do you discern between the best and the average?"

Labor and employment law firm Fisher & Phillips LLP represents a wide variety of national and regional employers. The firm’s Irvine, Calif. office – one of 23 nationwide – offers a wide range of services to private and public sector clients, both unionized and non-unionized. With a focus on both preventive counseling and defense of claims, the firm addresses the business and legal objectives of employers in a way that optimizes their clients’ performance in today’s changing marketplace. To learn more about Fisher & Phillips, visit www.laborlawyers.com.