What is Pay Scale Transparency?

California now requires pay scales for all private employers with 15 or more employees. Historically, pay scales were used in public sector companies and union environments.

Although any company within any industry can and should establish pay scales because it is fiscally sound, many Human Resources practitioners do not know how to put a pay scale together and they can be a lot of work. A pay scale is simply the range of pay that employees are paid for a job, for example some are paid $16.00/hour and others are paid $20/hour and then others are paid somewhere in between.

Pay Scale Transparency requires employers to be prepared to share pay ranges with applicants and job holders. This means employers need to understand the who, what, when, where and why a job pays what it pays. It is the value of the job. Pay transparency means that this can be distinctly seen and understood by all.

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What is a Pay Scale?

Simple pay scale

Implementing a pay scale replaces the traditional salary/wage negotiation and can provide a road map for new employees to see their earning potential within the company while holding the same position. Employees benefit from knowing what to expect in terms of growth and compensation within a given company and can plan a future for their career path more effectively. Having this knowledge provides motivation for individuals to continue within the same organization working to hone their skills, continue their education, and work toward expertise in their role to increase their value as an employee.
Pay Scales also show pay inequities in a clear unbiased perspective once established.

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Pay Scale Transparency

Pay Scales

Developing a proper pay scale is determined by the size of your company, the business strategy, the revenue and more. After determining these 3 points, you take a good honest look at your current pay ranges, by looking at your payroll. After that the fun begins comparing the pay to a long list of factors. To find the factors you must look at your job evaluations and or job descriptions or create them. In the job description you find skills, expertise, experience, education, danger factors, etc. Then you find the value of the job by looking at competitors, the Bureau of Labor Statistics and the location of the job...and so much more.

Pay scales, also known as salary/wage structures or pay grades, are fixed systems employers create and use to determine an employee’s base salary/wage for their skills, expertise, experience, education, and kins of work. It is complicated at best.

Pay scales are not only done for compliance reasons. They are important business planning tools for companies to create new positions when the budget allows, while also providing a standard of transparency where employees know their value and join a company with clear wage expectations. Pay scales also serve as a motivating tool for employees to seek more certifications and gain expertise in their field for a sense of upward mobility within the company and role.

What is a Pay Data Report?

California employers of 100 or more employees and/or 100 or more workers hired through labor contractors must report pay and hours-worked data by establishment, job category, sex, race, and ethnicity to the Civil Rights Department (CRD) annually. This reporting is required under Government Code section 12999, as amended by Senate Bill 1162.

Employers with 100 or more must submit a pay data report for the prior calendar year to the Civil Rights Department on or before the second Wednesday of May each year.

Pay Data Report Development

Developing a Pay Data report requires a lot of time and patience. However, it is pretty straight forward. The Pay Data Report must include the number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey.

The pay data report includes the following information:

(1) The number of employees by race, ethnicity, and sex in each of the following job categories:

(A) Executive or senior level officials and managers.

(B) First or mid-level officials and managers.

(D) Technicians.

(E) Sales workers.

(F) Administrative support workers.

(G) Craft workers.

(H) Operatives.

(I) Laborers and helpers.

(J) Service workers.