Choosing how much you will pay an employee is tricky. We explain how small business owners can create a pay system that maintains employee loyalty and happiness. Original blog post: https://www.patriotsoftware.com/payroll/training/blog/what-is-internal-equity/ Try our online payroll software: https://www.patriotsoftware.com/payroll/

1. Internal Equity?
What Is

2. Choosing how much to pay your
employees can be tricky.
You want to be fair to your employees,
and you want them to feel valued.

3. By using internal equity, you can
create a pay system that maintains
employee loyalty and happiness.

4. DEFINITION:
Internal equity is
the comparison of
employee positions
in your business to
ensure fair pay.

5. Employees should also perceive that they're
paid fairly compared to their coworkers.
Otherwise, they might
feel unvalued and leave.

6. When you adopt a straightforward and honest
payment system, your employees will believe
that they are being paid fairly.
This boosts company morale and
employee loyalty.

7. So, how can you achieve
internal equity?

8. 1. Consider the tasks of your employees.
If two employees perform similar
tasks, they should earn similar wages.

9. 2. Don't base employee wages solely
on job titles.
Two workers that have different titles but
perform similar tasks should have similar wages.

10. 3. Consider educational backgrounds
and relevant experience.
Similar tasks are the main consideration when
you set employee wages, but an employee's
education and work experience should be
accounted for.

11. 4. Document all the factors that led
you to your decision.
This will maintain transparency and fairness in
your business. If an employee ever questions
their wages, you'll be ready to answer.

12. There are 2 major laws
regulating internal equity:
The Equal Pay Act
The California
Fair Pay Act
1.
2.

13. Equal Pay Act
This act states that men
and women who have
equal jobs must be
equally compensated,
and that you can't use a
person's sex to justify
higher wages.

14. California Fair
Pay Act
This Act is more strict than the
Equal Pay Act. California
employers must pay equal
wages to employees performing
similar work.
The Act also allows employees
to openly discuss their wages.

15. Thanks for
reading!

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