Within a specific salary range, a percentage based on salary generates relatively more dollars for employees at the top of the range. This may create pay inequities.
A percentage based on a salary midpoint tends to equalize the increase for all employees in that particular salary grade/range. But this also results in a reduced actual percentage for any employee above the midpoint. This approach is used to manage salaries by keeping them more closely to the midpoint.
A percentage based on position in range (e.g., quartile) has the same effect as percentage of actual salary: employees higher in the range receive more in actual dollars.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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