230. Pay Differentials

Introduction

A pay differential is special additional pay recognizing unusual competencies, circumstances, or working conditions applying to some or all incumbents in select classes. Creating and issuing a pay differential may be needed in order to recognize:

Recruitment and retention difficulties
Special professional or educational certification
Undesirable work location or shift assignment
Performance of atypical duties
Recognition of special but temporary responsibilities
Acquisition or possession of special licenses, skills, or training
Incentive-based pay
Other special considerations that impact a subgroup within a given class

The base pay of a job class is normally considered the only source of monetary remuneration for a given incumbent’s performance of assigned duties and responsibilities. In some instances, however, a subgroup of positions within the overall job class might have unusual circumstances, competencies or working conditions that distinguish these positions from other positions in the same class. If these factors warrant additional pay in order to recruit and retain incumbents within these select positions, pay differentials may be appropriate. The information needed to create or adjust a pay differential is discussed below.

The majority of pay differentials are located in the Pay Differentials listing section of the California State Civil Service Pay Scales. However, some of the alternate range criteria in the Pay Scales function as pay differentials and will eventually be converted to the appropriate category (for further information on Alternate Ranges, see Section 220).

Pay Scale Section 14

Pay differentials are the responsibility of the Department of Personnel Administration (DPA). The format of the pay differentials include:

the effective date;
Collective Bargaining Unit Identifier and classes affected;
applicable salary rate and conditions; and
specific criteria for eligibility.

Salary Movement

DPA Rules 599.674 or 599.676 are used to determine the rate of pay for an employee who is promoted from a class with a pay differential. Certain pay differentials also include special instructions on determining the new salary when there is movement between classes; for instance, some pay criteria specifically state that an employee’s movement to another class will be calculated on the combined rate (base salary plus pay differential) for the purpose of determining salary movement.

Establishment and Revision of Pay Differentials

These are typically initiated through the collective bargaining process but may also be the result of a classification proposal. In either case, it is CCD’s responsibility to oversee the proposed pay differential’s technical analysis. Departments interested in establishing or revising a pay differential need to substantiate the request by providing information on the management need for the establishment or revision to their CCD analyst by submitting the Pay Differential Analysis, the Pay Differential Summary Sheet, and the Pay Differential Transmittal.

NOTE: As a general policy, pay differentials should not be established to recognize longevity (in other words, pay that recognizes an incumbent’s long-time tenure within a given position or class). Such pay differentials complicate the general pay plan for related classes and responds to concerns that are better addressed through general pay increases, class specification revisions or the implementation of more narrowly defined pay differentials.

Justification for Pay Differential Establishment

When determining the need for a pay differential, consider the special or unique circumstances and the additional benefit or value to the State:

The circumstances must impact some but not all of the positions. The circumstances should not involve higher-level skills and/or abilities that would normally be measured or assessed through testing. In other words, pay differential criteria should not be used to circumvent or take the place of civil service examinations.
Special or unique circumstances may be present in the work or assignment. For, instance, the work or assignment may entail additional risk or danger, have other unusual or special conditions, or be located in a hard-to-reach or remote location. In some situations, the employee may be working under the same or similar work conditions as all others in the class, but possess a related license, certificate, or special training enabling him/her to perform work more efficiently or effectively.

In these situations, prevailing practice in private and public settings dictates that some form of additional compensation is appropriate.

Professional or Educational Certification, Special License or Training

In some professions, employees possessing special certificates or registration can command a higher level of pay because the higher-level skills and abilities are of value to the job. If certification or registration is a requirement of the class and built in the minimum qualifications, a pay differential is not appropriate.

It is important to assess the value of certification or registration when considering a pay differential. If no relationship can be established between the possession of the certificate and the work outcome, a pay differential is not necessary.

When assessing the value of a certificate, review its requirements to determine how it relates to the work of the class.

The requirements should be essential to or clearly beneficial for the performance of the job or assignment. If it is unlikely that employees would ever use the additional skills or training associated with the certificate, a pay differential is not necessary.
The requirements should be rigorous. If the certificate is easily obtained (for instance, one that can be obtained by attending a class or seminar), it does not support establishment of a pay differential.

Recruitment and Retention

When it is demonstrated that a classification’s base pay is insufficient to recruit and retain employees, a Recruitment and Retention (R&R) Pay Differential is appropriate. When requesting the establishment of an R&R Pay Differential, provide the following information in the “basis for request":

General information regarding the R&R Situation

Describe the problem in general terms. Include the title of the impacted class, the bargaining unit, the number of authorized positions and number of vacancies for the class within the specific geographic area. If it is available, provide historic information on the frequency and duration of vacancies. List other departments with positions/vacancies in the same area. (This information is available on PIE). Describe the geographic area and the competing labor market.

Description of Recruitment Problems

Detail the department’s efforts to hire or promote staff. Indicate the number and frequency of exams that were conducted for the class. For the most recent exams, provide the number of applicants, the number who tested, the size of the resulting lists, the number offered employment, the number who declined, including reasons if available. Provide other related information to explain or illustrate special recruitment efforts.

Description of Retention Problems

Describe attrition from the class in detail. Indicate the number of incumbents who have left compared to the number of authorized and filled positions. Indicate whether they promoted or transferred to other State jobs; left State service employment to other public or private employment; retired, changed careers, or left for other reasons. If available, provide information obtained in exit interviews.

Prevailing Rate of Pay for Similar Work

Conduct an informal survey of the major employers in the area from which prospective employees are recruited. Provide information regarding the number of positions, the starting level of pay and the pay range for the class or occupation.

Examples

Provide anecdotal comments on actual experiences hiring and/or retaining staff in the class and area.

Related Information

Provide any other information regarding pay, benefits, or cost of living in the area. Describe how it compares to other geographic areas.

All of the above information will be considered. In some situations, some of the above information may not be available. Nonetheless, CCD’s review considers the information as a whole to determine whether an R&R Pay Differential is the appropriate response. In some cases, an individual Hire-Above-Minimum rate ( Section 250), special recruitment efforts, class or pay restructuring, or other actions may respond to the need. The impact of the proposed R&R on related classes and departments should be assessed to ensure that establishing the proposed R&R does not cause related problems.

Recruitment and Retention problems that impact all positions of a class are typically addressed by special salary adjustments. Special Salary Adjustment addresses the justification for “Special Salary Adjustments.”

Elements of a Pay Differential

Pro-Rated: Payment is assessed proportionately based on time worked. For example, if an employee only works 50% of the month, the pro-rated pay differential will be paid at 50%.
Flat Rate: Fixed; unvarying. For instance, a flat rate may be established and applied on an hourly basis, or it may be established as a monthly rate, where the pay differential is applied regardless of the amount of time worked.
Subject to Qualifying Pay Period: A QPP requires 11 days worked in a pay period. Typically, pay differentials are not subject to QPP; however, there may be appropriate rationale for inclusion [see Pay differential 078 (META Instructor Pay - Unit 12)].
Tenure and Time Base Eligibility: Review various time bases (full time, part time, etc.) and tenure (permanent, temporary) for applicability. Generally all tenure and time bases are eligible; however, there may be appropriate rationale for exclusion [see Pay differential 062 (FLSA-Exempt Employee Differential for Extremely Arduous Work and Emergencies) or Pay differential 004 (Physical Performance Incentive Pay), Pay differential 002 (Advanced Education Differential), and Pay differential 005 (Motorcycle Differential Pay - Unit 5)].
Subject to Public Employees’ Retirement System (PERS) Deduction: DPA has authority under Government Code (GC) Section 20636 to determine applicability for inclusion in PERS. Typically, if the work is considered to be regular and ongoing, the pay differential will be considered appropriate for inclusion in PERS [see Pay differential 014 (Bilingual Differential Pay), considered regular and ongoing, versus Pay differential 019 (Canine Differential Pay), where work and assignment varies)].
Overtime: If a classification is covered by the FLSA, the rate of the pay differential must be included in the pay calculation. If the class is not covered by the FLSA, overtime is not applicable.
Industrial Disability Leave (IDL) and Enhanced IDL: Included if the work is regular and ongoing or considered part of a regular assignment at that time. GC Section 19871.1 states that an employee who is receiving IDL benefits shall continue to receive all employer benefits which he or she would have received, had he or she not incurred disability.
Enhanced IDL is only applicable to those classes in work situations covered by this benefit. For example, refer to Avalanche Control Pay - Unit 12.
Nonindustrial Disability Insurance: Generally included if the work is regular and ongoing; not applicable if work is temporary or performed on an irregular basis.
Lump Sum – Vacation/Annual, Sick Leave, and Extra: Generally included if the work is regular and ongoing; not applicable if work is temporary or performed on an irregular basis. The term “Extra” refers to Compensating Time Off hours accumulated.