May 30 2023
Best Plans to Reward High-Performing Employees

How to REWARD HIGH-PERFORMING EMPLOYEES

Instead of a more traditional annual review focusing on equitable pay among staff members, employers should consider compensating their employees, especially high-performing employees, based on merit and job performance over a predetermined period.

Advantages

  • Increased motivation-employees will be incentivized and, as a result, become more enthusiastic about doing a job well done
  • Higher work standards will be set to meet performance
  • Differentiation between staff who is is over/underperform-higher performing employees will be recognized for their job well done
  • More clearly defined company goals and objectives- employees will understand and deliver on work expectations which will lead to increased productivity and retention
  • Recruitment- there will be further opportunities for pay and advancement, which will intrigue job applicants

Disadvantages

As your organization looks to implement a merit-based compensation plan, consider the downfalls, including increased employee competition and employee bias:

  • Without clear standards on merit pay may be awarded, merit-based pay is subject to interpretation and bias from each individual’s supervisor
  • Employees may begin to expect raises and forget about the performance aspect of pay
  • Instead of unifying the interest of the company, merit pay can bring competition within the workplace
  • Lack of communication and understanding- it is important for the supervisor to clearly define and explain to employees how the merit pay system works

Set up Merit-Based Pay

As listed above, setting up a merit-based pay structure has advantages, including increased employee motivation and retention. Before implementing a merit-based pay structure, there are important steps to take, as indicated below:

Consider budget implications

Before implementing the merit-based pay policy, to better understand and account for the future, establish a budget for pay that may be rewarded for employee performance.

Develop Policy

It is important to have a consistent, documented merit-based policy that clearly defines how employees will be awarded additional pay for their performance based on existing metrics and timetables.  This will help eliminate bias and inconsistent merit-based pay within the workplace.

Communicate

Once your organization has decided to implement the merit-based plan, set standards, and account for budget implications, develop a communication strategy to communicate with your staff what is expected of them clearly and the company standards.

Clearly Communicate:

  • Company Objectives and timeline
  • Merit Standards
  • How merit pay will be calculated
  • Departmental and individual goals

Software Consideration

To eliminate the risk of error and to streamline operations, it is recommended that your organization utilizes software to track salary data and the merit pay structure.  The software can also help your organization evaluate metrics and the success of the merit-based pay system. 

Summary

Merit pay can go a long way by showing your organization that you honor their hard work and dedication. Employees will begin to feel appreciated, work harder, and display higher retention levels.

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May 30 2023
California’s Pay Transparency Law- SB 1162

California’s Pay Transparency Law- SB 1162

Implications

California’s Pay Transparency Law-SB 1162 is making headway. The state legislature approved the bill on Monday, September 13, 2022.  California’s Governor Gavin Newsom has until September 30, 2022, to enact the bill. 

This new law would require all employers in California with fifteen or more employees to include the hourly rate or salary range on their job postings. In addition, upon request, employers would be required to provide the pay scale to their staff, and employers would be required to submit data payroll data to the state annually broken down by the demographics of their organization.

Employer Implications

California’s Pay Transparency Law-SB 1162 is making headway. The state legislature approved the bill on Monday, September 13, 2022.  California’s Governor Gavin Newsom has until September 30, 2022, to enact the bill. 

This new law would require all employers in California with fifteen or more employees to include the hourly rate or salary range on their job postings. In addition, upon request, employers would be required to provide the pay scale to their staff, and employers would be required to submit data payroll data to the state annually broken down by the demographics of their organization.

Groundbreaking State

The state of California is home to many groundbreaking changes in employment law.  California’s Equal Pay Act requires employers in the state to disclose the pay range for positions they’re recruiting for to applicants upon request. In addition, employers within the state with at least one hundred employees are required to submit payroll data to the state annually.

California is now setting a groundbreaking precedent by adding an additional layer of transparency. California would be the first jurisdiction to require employers to distribute payroll data based on the demographics of the organization.

What are the implications of Law-SB 1162?

  • This new law would require all employers in the state of California with fifteen or more employees to include the hourly rate or salary range within their job postings
  • Upon request, employers would be required to provide information on what they’re paying their staff members
  • Employers with one hundred or more staff members would be required to report to the state annually the median and mean hourly rate for each job category broken down by race, ethnicity, and sex
  • In addition, employers with one hundred or more workers through labor contracts would also be required to submit similar data annually
  • All employers would be required to record their individual employees’ job title and wage history during employment and for three years post termination

California Fair Pay Act-SB358

The California Fair Pay Act-SB358, originally enacted in 1949, was amended on October 6, 2015, to address pay disparity among men and women within the workplace.  The amendment requires employers only to rely on relevant factors to determine pay differences for their staff who perform substantially similar work. Such relevant factors include seniority, merit, quantity or quality of production, or a bona fide factor such as education or experience.

SB358 was also amended to protect employees who wish to discuss their pay with their coworkers openly, and it prohibits employers from retaliating against their staff for doing so.

Employer Liability

SB 1162-Failure to file the required reports or disclose the required information to the state of California would bring penalties to employers for non-compliance. In addition, employees would be eligible to file a complaint with the labor commission, which could lead to further fines and violations.

SB358-The division of labor standards enforcement enforces penalties for employers who violate SB358. Employers would be subject to back pay, interest, and liquidated damages.

To eliminate liability, employers are encouraged to document pay decisions within company policies and job descriptions based on relevant job factors, including job requirements, responsibilities, and working conditions.

Other Transparency Trends

Salary is an important factor for job seekers and, at times, can be a make-or-break decision whether to apply.  Organizations are starting to recognize this, and the number of job listings with salary information has been increasing. 

Some major companies like Microsoft plan to start disclosing pay on all their job listings more than mandated requirements to recruit qualified candidates. 

In addition, to meet job seekers’ needs, popular job listing websites like Indeed recognize this trend and have acted. Indeed encourages employees to post their salary, and if not provided, they utilize an algorithm to atomically pull salary information based upon the job description and the characteristics provided. 

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Feb 12 2023
Pay Transparency – Quick FAQs

Pay Transparency & Wage / Salary Posting Requirements:

The Essentials

SALARY RANGE POSTING – The states of Colorado, Washington, New York, California, and Rhode Island all have similar requirements regarding posting salary ranges. That is, employers should post the minimum and maximum that they genuinely believe will be paid for the position. There are also several requirements based on the size of an organization. New York requires salary posting for companies with four or more employees. California’s pay transparency requirement applies to companies with at least 15 employees.

RECORD MAINTENANCE – Companies are asked to maintain pay transparency records, including a history of their salary ranges. For example, New York state law requires employers to maintain a “history of compensation” for posted positions and job descriptions (to the extent they exist). Employers should consider assessing how they store, aggregate, and categorize compensation records for each advertised job opportunity or position. Washington, California, and Colorado have enacted similar requirements.

BEYOND COMPENSATION: BENEFITS, BONUSES & EQUITY – Some states, including Washington and Colorado, require posting compensation information beyond salary ranges. Employers of these states must post the benefits offered with the position, including bonuses, equity, and any additional employee compensation. California, however, does not currently require this.

PAY COMPARABILITY PROTECTION – Most states to enact pay transparency legislation have done so in part to protect employees from gender discrimination. These protections forbid employers from the following: “Paying an employee of one sex a wage rate less than the rate paid to an employee of a different sex for substantially similar work, regardless of job title, based on a composite of skill; effort, which may include consideration of shift work; and responsibility.” In addition to gender, in 2017, California Senate Bill 1063 added extensions to Fair Pay Act protections to prevent race- and ethnicity-based disparities in pay.

Contact us for additional information on navigating your plan with pay transparency and job posting requirements!

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Feb 5 2023
CA, NY, CO: Dealing with Pay Transparency in 2023

How to comply with Pay Disclosure Rules

The First Month & Key Takeaways

Posting of Ranges – Most Companies Publish Subsets

  • A review of ranges posted in January 2023 indicates that most companies have opted to post a subset of the range, not the full range. Most advertised ranges present gaps between 20% and 30%. Generally, the difference between the minimum and maximum range is between 40 and 60%.

Why Post the Full Range?

Companies mainly post the full range to avoid potential liability from only posting a subset. It must also be stated that companies who only post a subset may also have to develop a plan to provide the applicant with the full range to avoid a negative hiring experience. Additionally, it is still too early to determine how companies handle hiring requests for the full salary range. Suppose companies are providing the full salary range. In that case, they must ensure a cohesive policy for responding to employee inquiries aligned with the ranges posted in their job ads.

Using Posted Data to Market Priced Jobs

CA’s Labor Commissioner Provides Guidance on Pay Ranges

  • CA Labor commissioner added interpretations and additional guidelines for pay range. A pay range is what the employer expects to pay an individual. This could be the actual pay or a range. Since the definition does not distinguish between a hiring range and a full compensation range, companies have interpreted that they will be within the new posting requirements if they only post the hiring range.

CA’s Labor Commissioner Releases FAQs.

  • The California Labor Commissioner’s office released the much-anticipated FAQs on the state’s new pay scale disclosure requirements under the Equal Pay Act, which became effective on 1/1/2023. These FAQs have been added to the DLSE’s guidance for the California Equal Pay Act (Labor Code section 1197.5) and Labor Code section 432.3. There are now 40 FAQs, which are important for all employers operating in CA. Among them:
    • Salary Scale, Definition
    • Employer size threshold
    • Remote Workers
    • Posting in other states
    • Displaying the Range
  • The full article can be found here: CA’s Labor Commissioner’s FAQs, Release, Dec. 2022

Compliance, CO

  • Concerning compliance, Colorado -one of the first states to pass pay transparency legislation- has seen few compliance issues. Since the legislation took effect in 2019, only a handful of Colorado companies have been fined. In fact, according to a survey conducted by Pay Clarity, about two-thirds of US employers are either planning to or considering disclosing pay rate information in future job listings, even in states and municipalities where they are not required to do so.

Job Descriptions and Compliance

  • The most difficult obstacle employers will likely face is updating their job descriptions. Given that the New York State law requires disclosure of existing job descriptions, employers should consider updating job descriptions to ensure that the description identifies the position, where it can be—or must be—performed, along with any other information required by this law and relevant to the compensation range or listed salary. As employers review other postings, including ranges posted by other companies, they should compare their descriptions’ requirements and salary ranges and update the job information accordingly.

In summary, pay transparency is emerging as one of HR’s best practices for the near future due to its numerous benefits. In fact, pay transparency is one of the top considerations for Gen Zs when considering where to apply. Firstly, it promotes fairness and equality by eliminating wage gaps and disparities, ensuring employees receive equitable compensation for their work. This transparency fosters trust and engagement, as employees have a clearer understanding of their value within the organization. Moreover, pay transparency enhances internal communication and reduces the likelihood of wage discrimination, contributing to a more inclusive work culture. Additionally, it enables organizations to attract and retain top talent by showcasing their commitment to fairness and providing a competitive edge in the job market. Overall, pay transparency aligns with the principles of social justice and yields positive outcomes for both employees and organizations, making it a crucial HR practice for the future.

2/5/2023

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