December 28, 2022

How To Create a Pay Scale

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One of the new laws going into effect in California on 1/1/2023 requires the disclosure of company pay information by employers. Pay scale disclosure (SB1162) applies to all employers, however, the rules are different for different company sizes.

All employers will be required to develop pay scales to comply with this law.

In addition:

  • Companies with 1+ employees must provide any employee with their pay scale information (only for their position) if requested.
  • Companies with 15+ employees must also include pay scale information for any position postings when recruiting.
  • Companies with 100+ employees must also complete California’s pay data report for all positions by the 2nd Wednesday of each May.

A pay scale is a chart-type document that shows the pay ranges (hourly or salary) for every position in your organization. For example, for a receptionist position, you would list the title plus the minimum and maximum dollar amount you’d be willing to pay for that position. If you have more than one person in that position, you’d also list the average dollar amount.

Our partner, HR Jungle, has provided a free template to help you create a pay scale for your organization.

Here’s how to use it:

  • List the wages of all the employees in your company (see the “Wages” tab on the template).
  • Give each title a generic group name, such as Director, Manager, Supervisor, etc.
  • Sort positions by their generic group name (see the “Grades” tab on the template).
  • On the “Grades” tab, move the employee’s wage into the correct column based on their skill level.

The biggest issue you may face is fixing situations where you have two employees with similar job titles or responsibilities but who are paid significantly different wages. If this is the case, be sure to document a “legal” reason for the difference. For example, perhaps one employee has been working for you for 10 years and the other only 1 year. Be aware that pay adjustments may be required to correct differences you can’t justify.

Shared with permission from HR Jungle LLC. All rights reserved.

Disclaimer: What is written here is our opinion based on our training, education, and years of human resources management and consulting experience. We have attempted to provide accurate information but keep in mind the information is written in a somewhat generic manner and some content may have been written by someone unassociated with HR Jungle. We are not employment attorneys and do not pretend to be. Nothing written here should be used as a substitute for obtaining legal advice from an attorney specializing in employment law.