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Just Wage

Just Wage Forum 2021

Criterion 7: Wage Considers Performance, Qualification, and Type of Work

A just wage reflects compensation for experience, education, and training; it is informed by regularized and standardized evaluations measuring job performance; and it is part of a wage structure featuring transparent and fair delineations of titles, functions, and job descriptions.

Wage considers performance, qualification, and type of work

With the exception of the federal minimum wage and related state statutes (which vary greatly by jurisdiction), US laws do not generally impose specific procedures for determining wages on private sector employers. For government workers, however, civil service guidelines establishing "merit system principles" have led to wage scales with criteria for hiring, compensation, performance review, and promotion.

While these standard methods for evaluation and pay are not in force in the private sector, the procedures that employers do follow — including official job descriptions and performance evaluation practices — are important in other legal contexts. Job descriptions, for instance, are key factors for determining if an employee has protected rights concerning overtime pay, disability accommodations, protection from discrimination, and medical leave. Employment contracts featuring job descriptions strengthen these rights, often by prohibiting employers from initiating significant changes to a worker's duties. Similarly, performance evaluations may be relevant to disputes over hiring and firing decisions, providing evidence to support an employer's or employee's claims in court. Moreover, some states such as California require that employers share evaluation records with employees upon request.

An additional area of law that applies to employers’ methods for determining wages are requirements for pay transparency. Many of these requirements are state-level protections for employees — and bans on employer penalties — if a worker inquires about or discusses pay structures within their organization. Notably, many of these requirements have an explicit purpose of increasing pay transparency to promote gender parity in pay.

Beyond state or federal law, some companies take action on their own to establish standard methods for determining compensation. The 2010 Culpepper Salary Range Structure Practices Survey found that 72 percent of North American companies had formal salary range structures. In designing these structures, nearly all of the companies used survey data about compensation for similar roles. While this high frequency of formal structures is encouraging, it is worth noting that implementation varied greatly between companies.


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