Introduction, and the SHRM Body of Competency & Knowledge

This study guide is my interpretation of the most important and relevant information related to the SHRM-CP test, it is not meant to be a complete guide that covers all areas of the SHRM-CP, and probably shouldn’t be your only study source. A lot of this guide is derivative of the book “SHRM-CP/SHRM-SCP Certification All-in-One Exam Guide” by William H. Truesdell; Dory Willer; William D. Kelly, which I personally believe to be one of the best guides for the SHRM-CP test. I would definitely recommend getting that book if you want a more comprehensive guide to work with. They’re not paying me to endorse them but I attribute much of my success on the SHRM-CP to that book.

I intend for this to be a collaborative document, so if there’s anything important that I missed, please feel free to add comments or shoot me a pm on Reddit (/u/andypizzle). I’ll try to check on this every couple of days during the Winter 2019 testing window.

1.1 SHRM Body of Competency and Knowledge

The SHRM BoCK is basically a roadmap for the SHRM credentials. It outlines the HR-related areas that should be covered, but doesn’t really go into detail on them.

If the SHRM-CP test was a pizza, the BoCK would be like a list of all the toppings you could put on the pizza. Think of leadership/motivation theories like cheeses; it’ll tell you about all the different types of cheeses(theories), but won’t tell you the attributes of each cheese, or which cheese works best with different types of toppings (people/situations). This is probably a horrible analogy but I’ll edit this document again when I can come up with something better.

The SHRM BoCK is free to download on the official SHRM website.

https://www.shrm.org/certification/about/body-of-competency-and-knowledge/Pages/default.aspx

Section 2 — US Laws and Regulations

These are just the US laws and regulations that I felt were the most important/relevant to the test. There are a bunch more that are covered in the guide mentioned in the introduction, but the ones listed here should provide a good foundation.

Laws applying to companies with 1 or more employees:

• The Consumer Credit Protection Act (1968)
• Applies to companies with at least 1 employee
• Limits the amount of wages that can be garnished
• Creditors can only garnish up to 25% of your disposable wages (after deductions)
• Deductions are things such as group health insurance, federal tax withholding, etc.
• Child support: Up to 50% garnishment if you have dependents, 60% if you don’t
• Student loans: Up to 15%
• Back taxes: Pretty high, employer gives you minimum, the rest go to IRS
• Employers cannot retaliate unless you have more than 1 garnishment.
• Protections decrease once you have 2 or more garnishments
• Davis Bacon Act
• Contractors/subcontractors have to pay prevailing wages to their laborers/mechanics
• Employee Retirement Income Security Act (ERISA)
• Protects employees covered by a pension plan from losses in benefits due to job changes, plant closings, bankruptcies, or mismanagement
• The Health Insurance Portability and Accountability Act (HIPAA)
• Individuals who leave/lose their jobs can obtain health coverage even if they or someone in their family has a serious illness/injury or is pregnant
• Provides privacy requirements related to medical records
• Limits exclusions for preexisting conditions and guarantees renewability of health coverage to employers and employees
• Fair Labor Standards Act (FLSA)
• Mainly related to how people are paid (Minimum wage, overtime)
• Helps determine whether a job is exempt or nonexempt from overtime pay
• Requires employers to keep a record of employee information
• How much they are paid, as well as basic identifying information
• Overtime calculation (1.5x normal pay rate, for all hours worked over 40)

Determining whether a job is exempt or nonexempt under FLSA:

Exempt Status:

• Five main types: Executive, Administrative, Professional, Computer Systems, Outside Sales

Exempt and Nonexempt Employees:

Exempt: Excluded from overtime requirements of the law

Nonexempt: Are not excluded from the overtime requirements of the law and are entitled to overtime.

Fair Labor Standards Act (FLSA) Exemptions:

An exempt employee must meet three requirements, referred to as white-collar exemptions:

• Minimum salary
• Paid on a salary basis without improper deductions
• Perform exempt duties

Primary Duty Issue:

A primary duty is the main or most important duty and is an important part of exemption. Thus, employees who spend more than 50 percent of their time performing a specific duty will generally satisfy the primary duty requirement.

• The lower the percentage, the greater the legal risk if challenged

Executive Exemption

• Have a primary duty of managing an enterprise, department, or subdivision
• Have the authority of the employer to hire and fire
• Direct the work of at least two full-time employees or their equivalent
• Affect promotion decisions

Administrative Exemption:

• Requires performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers
• Includes the exercise of discretion and independent judgement related to “matters of significance.”

Professional Exemptions:

• Learned Professionals
• Requires advanced knowledge in a field of science or learning that is acquired by prolonged instruction
• Work is intellectual in nature and requires exercise of discretion and judgement
• Creative Professionals
• Must meet minimum salary requirements
• Perform work that requires invention, imagination, originality, or talent
• Perform in a recognized field of creative or artistic endeavor.

Highly Compensated Exemption:

• Make an annual salary of $100,000 or more that includes at least $455 per week paid on a salary or fee basis
• Perform one of the duties of an exempt executive, administrative, or professional employee.

Computer Employees

• Must meet the salary minimum with a salary of $455 per week or $27.63 per hour
• Employee’s pay cannot be subject to deductions inconsistent with the salary basis requirement
• Primary duties must fall into one of four categories:
• Application of systems analysis techniques and procedures
• Design, development, documentation, etc of computer systems
• Design, documentation, testing of computer programs related to machine operating systems.
• A combination of these duties

Outside Sales:

To qualify for the outside sales exemption, an employee must:

• Have a primary duty involving making sales or obtaining orders and contracts
• Be customarily and regularly engaged away from the employer’s place of business
• Outside sales employees are not subject to the minimum salary requirements of other exemptions

Improper Deductions

Employers who make improper deductions will lose the exemption (And thus have to pay overtime) for all employees in the same job classification working under the individuals responsible for the improper deductions during the time period the deductions were made if they did not intend to pay on a salary basis.

Examples of impermissible deductions:

• Absences resulting from the operational requirements of the employer
• Deductions for illness in less than full-day increments

Examples of permissible deductions:

• Employee performed no work in an entire workweek
• Employee is absent from work because of personal issues excluding sickness or any form of disability
• Disciplinary suspensions of one or more full days

Safe Harbor:

A “safe harbor” provision prevents an employer from losing an overtime exemption for improper pay deductions — regardless of the reason for the improper deductions, where:

• The employer has a clearly communicated policy prohibiting improper pay deductions
• Employees are reimbursed for any improper deductions
• The company makes a good-faith effort to comply in the future
• E.g: Employee has a full day of pay deducted because he/she was sick. It was later discovered that he/she worked for 2 hours before taking the rest of the day off. As long as the employer reimburses the employee in a timely manner, overtime exemption will not be lost
• If any work is performed in a day, no deductions from salary are allowed

FSLA Basic Overtime Provisions:

• Sets rate of overtime pay (1.5 times regular pay (which includes base pay, shift premiums, production bonuses) after 40 hours worked)
• Requires overtime on time worked, not time compensated (sick pay, jury duty pay, holiday pay, vacation pay, etc)
• Sets workweek as any fixed, recurring period of 168 hours (7 days * 24 hours)

Compensatory Time

• Overtime usually must be paid in cash
• Public-sector employers may grant compensatory time off.
• Does not apply to nonexempt private sector employees
• Public employees can accumulate “comp time”
• Police/Firefighters: 480 hours
• Public employees: 240 hours

FLSA Child Labor Provisions

Restricts hours and conditions of employment for minors

Under age 14:

• Prohibited from most nonfarm work
• May be employed by parents
• Certain jobs permitted (e.g: actors, newspaper carriers)

Age 14–15:

• During school hours: 3 hours/day
• During school vacation: 8 hours/day
• Hours restricted

Age 16–17:

• Prohibited from hazardous jobs
• No other restrictions

Laws applying to companies with 1 or more employees (Continued):

• Labor Management Relations Act, or Taft Hartley Act (LMRA)
• Helps employers
• Prohibits unfair labor practices by unions and outlaws closed shops, where union membership is required in order to get and keep a job.
• National Labor Relations Act, Or Wagner Act (NLRA)
• Helps unions
• Provides employees the right to form unions and negotiate wage and hour issues with employers
• Grants employees the right to organize, join unions, and engage in collective bargaining and other “concerted activities”
• Protects against unfair labor practices by employers
• Landrum-Griffin Act
• Helps employees in unions
• Protects the rights of union members from corrupt or discriminatory labor unions, and applies to all labor organizations
• Taft-Hartley and Landrum Griffin both aim to protect individuals from unions.
• Both have people names in them
• Both kind of start with L
• Norris-LaGuardia Act
• Prohibits yellow-dog contracts
• Agreements where employees promise employers that they would not join unions
• Tip: Chuck Norris and his Yellow Dog. Chuck Norris owns his yellow dog and tells him what he can’t and can’t do
• Sherman Anti-Trust Act
• Prohibits attempts to restrict competition or fix prices
• Prohibits restraint of trade
• Wagner-Peyser Act
• Assists the unemployed
• Provides job seekers with assistance in their job search, and recruitment services for employers

Laws applying to companies with 15 or more employees:

• Americans with Disabilities Act
• Employers are required to provide job accommodations for qualified individuals
• E.g: An accountant with diabetes requires a specific meal schedule, he is fully capable of doing his accounting job. The employer should allow him to have a different meal schedule
• Job accommodations: If there is no request for accommodation, no action is required by the employer.
• Prohibits employers from inviting job applicants to identify their disability status prior to receiving a job offer
• An employer is not required to make an accommodation if it would impose an “undue hardship” on the operation of the employer’s business
• Civil Rights Act (Title VII)
• Relates to employment discrimination and cites six protected classes
• Race, color, religion, national origin, sex, sexual orientation/gender identity
• Tip: Remember that the Civil Rights Act does not protect discrimination against age or disability
• Age discrimination is covered under ADEA (20 or more employees)
• Disability discrimination is covered under ADA
• As of 06/15/2020, the Civil Rights Act applies to sexual orientation and gender identity
• Drug Free Workplace Act
• Only applies to federal contractors and all organizations receiving grants from the federal government
• Genetic Information Nondiscrimination Act
• Prohibits employers from using genetic information to make employment decisions
• Lilly Ledbetter Fair Pay Act
• Clock will begin running anew each time an illegal act of discrimination is experienced by an employee
• Statute of limitations for filing an equal pay lawsuit prior to the LLFPA was 180 days
• New statute of limitations for filing a claim under the Fair Pay Act with the EEOC is two years from the time the discriminatory paycheck was received
• E.g: Jill makes less money than John even though they do the same job and were hired at the same time. John and Jill are paid every week.
• Jill takes home a smaller paycheck every week compared to John because of wage discrimination. The Lilly Ledbetter Fair Pay Act makes it so that the 180-day statute of limitations gets reset whenever Jill takes home a smaller paycheck than John, instead of during the first event of wage discrimination (The first check).
• Before the Lilly Ledbetter Fair Pay Act, Jill would not have been able to file an equal pay lawsuit if she found out about the wage discrimination after already working 180 days at the company.

Laws applying to companies with 20 or more employees:

• Age Discrimination in Employment Act (ADEA)
• Prohibits discrimination for employees 40 years old or older
• COBRA
• Requires employers to offer terminating employees the opportunity to continue their health plan coverage after they leave the company or no longer qualify for benefits
• Cost must be at group rates; employer can add administrative service charge (max of 2%)
• Update general and qualifying event notices
• Provide notice within 90 days of employee leaving
• Establish reasonable notification procedures and communicate them to all employees
• Provide a notice of unavailability of continuation of coverage within 14 days of the date you are informed of the qualifying event
• Notify individuals whose coverage ends before the maximum continuous coverage period allowed
• COBRA (Additional info)
• Provides group medical coverage after a qualifying event
• Type of event determines the length of coverage, generally 18–39 months.
• Employer can charge the actual cost + a 2% administrative fee
• Federal law does not require employers to provide healthcare benefits
• Employers must offer COBRA coverage if it does provide healthcare benefits and employs more than 20 people.
• Employer does not have to offer COBRA coverage in the event of termination due to gross misconduct

Laws applying to companies with 50 or more employees:

• Affirmative Action:
• Federal contractors are required to have an AA program
• Equal employment opportunity and establish outreach programs for minorities and women
• Family and Medical Leave Act (FMLA)
• 50 or more employees
• Applies to all public schools and agencies, regardless of size
• Provides leaves lasting up to 12 weeks in a 12-month period
• Unpaid, unless employer has its own policy
• To qualify, employees must have been employed for at least 12 months, and have at least 1250 hours of service during the 12-month period
• Covers childbirth/adoption, care for ill child/spouse/parent, care for employee’s own serious illness
• Employee is guaranteed return to work on the same job, same pay, under the same conditions as prior to the leave of absence
• Affordable Care Act
• Employers must provide full-time employees with minimum health insurance coverage (or face a fine of $2000 per employee)
• Employers with fewer than 25 employees will receive a tax credit if they provide health insurance to their workers

Laws applying to companies with 100 or more employees:

• Worker Adjustment and Retraining Notification Act (WARN)
• 100 or more full time employees at a single facility
• Mass Layoff — at least 500 employees laid off from workforce of 500 or more; or when at least 33 percent of the workforce are going to be laid off where there is a total of 50 to 499 workers before the layoff
• Requires 60 days advance notice to employees of plant closing or mass layoffs
• Any employment loss of 50 or more people, excluding part time workers, is considered a trigger event to activate the requirements