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CHAPTER 9

Differentials, Supplements and Northern Virginia (FP) Expanded Ranges

 

  1. Differentials

  2. Supplements

  3. Northern Virginia (FP) Expanded Ranges

 

INTRODUCTION

In addition to base salaries established within the nine Pay Bands, the Compensation Management System provides other tools to address situations where market conditions or employees' work requirements support additional monetary payments to employees. These payments are categorized as differentials or supplements. They may be in effect for brief or extended periods of time, depending upon need.

NOTE: Traditionally, Pay Area differentials were paid to employees in the northern Virginia (FP) Pay Area. However, effective July 1, 2003, new procedures have been established for salaries of employees in northern Virginia. They are no longer treated like other differentials. They are discussed in this chapter as Northern Virginia (FP) Expanded Ranges.

DIFFERENTIALS

Generally, differentials are base pay adjustments to make salaries more competitive with the market. Differentials may be applied to Roles, Standard Occupational Classification (or SOC) Titles, Work Titles, Pay Areas, or individual positions in an agency and/or geographic location.

Requests for differentials are submitted with appropriate documentation to the Department of Human Resource Management (DHRM). Differentials that existed under the former classification plan were incorporated into the Compensation Management System when it was implemented. However, agencies should periodically review the need to continue differentials. DHRM also conducts such reviews.

Differentials are entered into employees' records on PMIS as special rates, or may be established as Alternate Pay Bands on position records. They are included in creditable compensation for retirement contributions.

(Note: Statewide staffing problems are remedied through re-banding a particular Role. Differentials are used to address more localized staffing problems.)

When employees are transferred, promoted, or demoted to new positions or move to new geographic locations, those employees' salaries are adjusted according to applicable policies and any changes in their assigned differentials. Agencies should ensure that affected employees are fully informed of the applicable conditions.

Types Of Differentials

  1. Competitive Differentials

    Competitive differentials are based on local market conditions and are typically reflected through an Alternate Pay Band, which extends the minimum and maximum salaries of an existing pay band. Competitive differentials are administered as a percentage of base pay that may be added to the pay band to address a particular position, Work Title, Standard Occupational Classification (SOC) or Role because the normal salary range is not competitive due to market conditions in a specific agency and/or geographic location. They may apply to locations in either the SW Pay Area or the NOVA (FP) Pay Area.

  2. Out-of-State Differentials

    Out-of-State Differentials are used where the Commonwealth employs individuals who work in locations outside Virginia because the market varies in different geographic regions of the United States. To attract qualified applicants to work in other states, it may be necessary to pay differentials to more closely match the markets in these areas.

Documentation Required for Agency Differential Requests

Agencies experiencing staffing problems due to non-competitive salary ranges in a labor market may submit a request to DHRM for consideration of a differential for individual positions, Work Titles, Standard Occupational Classifications, or Roles. The following information should be provided by the agency:

  1. Problem Statement that gives a concise summary of the problem. This statement should show a cause-and-effect relationship between pay and an identified problem. Example: During the past six months the agency has lost fifteen electricians to competing firms that pay an average of 20% above State salaries.

  2. Agency Actions that describe what the agency has done to improve staffing for the positions under study, such as expanding the recruitment area, providing in-band salary adjustments to incumbents, etc. The agency should include an assessment of why the staffing problems persist.

  3. Turnover and Vacancy data that describe the current staffing problem: turnover rate; current number and percentage of positions that are vacant; relevant historical data; and information from exit interviews. The analysis of information should focus on employees leaving for salary-related reasons. Promotions and transfers to other positions within State government, generally, are not indications of retention problems due to salary.

    Each agency is responsible for conducting exit interviews to obtain information on the reasons that employees are leaving their jobs. These interviews may reveal problems related not to salaries, but to other factors such as job satisfaction, opportunity for training and advancement, educational assistance, work environment and quality of management.

  4. Recruitment strategies that have been employed to fill vacancies. Agencies should specify the number of advertisements in a given period; media used; number of qualified applicants; salaries offered; applicants' most recent salaries and the reasons applicants have declined employment offers.

  5. Starting Salary analysis that describes the agency's experience with salary offers for new employees during the last twenty-four months. This analysis should address the position in the pay band in which employees have been hired and the number of exceptional salaries (over 15% increases) that have been approved.

  6. Internal Impact that includes an analysis of the positive and negative effects that a differential may have on the internal alignment with other employees in similar or related Roles in the agency.

  7. Market Data that may have been collected by the agency from competing firms in the local market area where the problem exists. Agencies should also assess any salary data that DHRM routinely provides. If competition is not limited to a particular locality, the collection of market data should be coordinated with DHRM.

  8. Certification of Availability of Funds based on the type of action the agency has requested. All requests for a differential should be accompanied with a statement from the agency that funds are available to support any resulting salary increases. Certification to the Secretary of Finance that funds are available to support salary increases may be required. DHRM uses national publications that report salary data for various localities throughout the United States to evaluate requests for differentials.

Additionally, where necessary, salary data may be gathered from other state governments, which also compete in these marketplaces. Salary information is available to agency human resources professionals in the DHRM Resource Center.

DHRM will evaluate requests for competitive differentials based on the documentation provided by the agency. It may be determined that DHRM needs to conduct a survey to verify the local salary information or determine if there is a statewide pay issue with the pay band assignment of the Role. This may involve contacting other agencies in the area with the same or similar Roles to collect information and data and assess the full impact a differential would have on these agencies.

Discontinuation of Differentials

When a differential is discontinued, employees who had qualified for the differential (e.g., in an affected Role) will retain their current salaries and, unless they are at the maximum of the pay band, will continue to advance in accordance with the Commonwealth's pay practices. Employees whose salaries are at or above the pay band maximum will be frozen until the Role is re-banded or pay band adjustments allow for additional salary increases.

 

SUPPLEMENTS

Supplements are non-base-pay payments that apply to specific positions under certain circumstances. Supplements are designed to address unique needs of an agency and often reflect market practices used for similar jobs. These pay determinations are decentralized to agencies and do not require DHRM authorization. However, agencies must provide information on any pay supplements to DHRM prior to implementation to determine any potential statewide impact.

Supplements are processed as special payments on payroll. They are not entered into PMIS because they are not always a part of the employee's pay. They are paid only when an employee's assignment qualifies based on its time, location, or the functions performed.

Types Of Supplements

The following is a listing of some supplements that are currently in effect:

  1. On-Call: when the employee is required to be available to return to work when necessary. Compensation is usually provided at the rate of one (1) hour of pay or compensatory leave for each eight (8) hour shift served. For a non-exempt employee, if the on-call duty is so restrictive that the employee cannot use the time effectively for his or her own purposes, the time is considered work time and must be paid in accordance with the Fair Labor Standards Act. Additionally, on-call pay must be included in the non-exempt employee's regular rate of pay when computing overtime liability.

  2. Call-Back: when an employee is called back to work during non-work hours. Call-back pay is provided for a minimum number of hours even though the employee may actually work less than the minimum time.

  3. Shift supplements: typically used in agencies that operate 24 hours per day, 7 days per week. Each agency must identify its work shifts that address its organizational needs. The information below provides general guidelines on shift hours. In addition, each agency must evaluate the workweek to include any work performed on the days traditionally considered a weekend (Saturday and Sunday). Employees working the second or third shift typically are paid the same supplemental amount. However, varying amounts may be approved depending on whether employees are assigned permanent or rotating shifts.

  4. First Shift: Morning hours generally in the range of 8:00 a.m. to 4:00 p.m.

    Second Shift: Evening hours generally in the range of 4:00 p.m. to midnight.

    Third Shift: Night hours generally in the range of midnight to 8:00 a.m.

    Split Shift: A work schedule where the employee works two or more partial shifts rather than a continuous eight (8) hour shift.

    When employees are assigned to permanent second or third shifts, agencies may include the shift pay in all payments to them by entering them on PMIS as special rates or by setting up alternate pay bands, similar to the handling of differentials. Shift pay then becomes part of the employees' base pay. However, such shift payments do not require DHRM authorization.

  5. Camp supplement: paid to employees for days spent at summer camp supervising the activities of mentally disabled children.

  6. Medication supplement: paid to employees who have completed the required training for dispensing medication, but whose Roles typically do not normally require dispensing medication. The supplement is paid for those periods when medications are dispensed.

  7. Working Condition supplement: paid to employees who have unusual risks that exceed the normal work environment for State employees.

Alternate pay bands may be set up where working conditions provide a continuing basis for higher pay, similar to differentials.

Documentation Required for Agency Determined Supplements

Agencies need to document the rationale, the amount of the supplement and the circumstances under which the supplement will be paid and maintain this documentation in their files. Agencies must notify DHRM prior to implementing new supplements.

 

NORTHERN VIRGINIA (FP) EXPANDED RANGES

Until July 1, 2003, differentials were applied to employees' salaries in northern Virginia. Effective July 1, 2003, there are no longer identifiable differentials in northern Virginia. Instead, expanded Pay Bands, with higher range maximums, have been approved for northern Virginia employees.

Pay Areas

The Commonwealth's pay plan recognizes two distinct pay areas (1) Statewide (SW) and (2) Northern Virginia (FP). In northern Virginia, or "NOVA," market conditions have consistently required the payment of higher salaries than in other areas of the state.

Statewide Pay Area (SW)

The Statewide Pay Area (SW) applies to positions in all localities in the state except those designated in northern Virginia.

Northern Virginia Pay Area (FP)

The northern Virginia Pay Area (FP) applies to positions located in the counties of Fairfax, Arlington, Prince William and Loudon, and the cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park.

Expanded Ranges

Beginning July 1, 2003, the maximums of Pay Bands 1-6 have been expanded by a standard 30% for positions in northern Virginia. A standard 20% expansion has been applied to the maximums of Pay Bands 7 and 8. The FP Pay Band minimums equal the statewide minimums, so that the FP Pay Bands are more than 105% wide. DHRM may adjust these expanded ranges from time to time as determined by the competitive rates for comparable jobs.

Northern Virginia expanded ranges provide a tool for staffing in the northern Virginia area. The amounts they are expanded are generally based on competitive rates for comparable jobs paid by other employers in the northern Virginia area. They are not cost-of-living allowances (COLA's) and they are subject to change.

Agencies should manage salaries within the FP Pay Bands based on the 13 Pay Factors, similar to the way all other salary determinations are made. Agencies may use Hiring Ranges and Sub-Bands, as necessary, to assist them in managing salaries of employees in northern Virginia.

As stated above, northern Virginia expanded ranges are applied to positions' Pay Band maximums. The salaries of individual employees in northern Virginia are recorded in PMIS in the same way as are the salaries of employees in other areas of the state. There is not a separate portion of a northern Virginia employee's salary that is identifiable as a differential.

When an employee moves to another position within northern Virginia or into or out of northern Virginia, the employee's new position may have a higher, lower, or the same salary range maximum. The new position may or may not have an expanded range. Where the range maximum changes, there is no automatic adjustment to the employee's salary, provided it does not exceed the new range maximum.

Employees' salaries may be adjusted as outlined below if their positions' range maximums change for reasons such as a Pay Band or Pay Area change. Management-initiated actions that may affect an employee's salary include Temporary Pay, Role Changes, Reassignments Within the Pay Band, Disciplinary Demotions, and Performance Demotions.

For Temporary Pay and Role Changes, management first applies the rules outlined in Policy 3.05 and then determines whether or not there should be an additional adjustment to the employee's salary due to a change in the position's salary range because an expanded range maximum applies to the old or new position. Management should consider the 13 Pay Factors in making this determination.

The pay band maximum does not limit Temporary Pay. For Lateral or upward Role Changes, the new salary cannot increase to an amount that exceeds the new range maximum. If a downward Role Change results in an employee's salary exceeding the new range maximum, the salary is maintained for six months and then reduced to the range maximum.

For Reassignments Within the Pay Band, the employee's salary normally does not change. However, management may decide to adjust the employee's salary based on a change in the position's applicable range maximum and the 13 Pay Factors. The new salary cannot exceed the assigned range maximum.

Performance and Disciplinary Demotions require a minimum salary reduction of 5%. Agency management may decide the extent to which the reduction should be greater than 5% based on any range maximum change and the 13 Pay Factors. The new salary may not exceed the new salary range maximum.

Employee-initiated actions include Promotions, Voluntary Transfers, and Voluntary Demotions. For these actions, the employee's new salary will be negotiated based on the 13 Pay Factors. Agencies may consider any change in the range maximum of the new position in their negotiations. The employee's salary may not be increased to exceed the new salary range maximum. If the employee's current salary exceeds the new range maximum, the agency may freeze the salary for six months, after which the salary must be reduced to the range maximum.

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