• Pay ranges can vary for several reasons, including pay compression and overtime.

Pay ranges help to categorize jobs and control costs, but sometimes an employee may end up being compensated outside the range. If an employee is paid higher than the maximum of a pay range, it is known as a red circle rate; if an employee is paid lower than the minimum of a pay range, it is known as a green circle rate.

Organizations should consider adjusting the salary level of employees being paid within these rates to bring them into the pay range. For example, an employee may have been promoted from an electronic technician to a supervisor. The employee’s pay is below that of the minimum range for supervisors, a green circle rate, so to compensate for the promotion, the employee’s pay should be adjusted to be within the pay range of supervisors.

Given the variety of jobs that must be compensated, employees in the same job may be compensated differently for many reasons. One employee may work overtime or a different shift and receive higher wages because of a shift differential. An employee may receive emergency pay for being called into work when they were not scheduled, or hazard pay for performing particularly dangerous tasks; they may be compensated just for being ready to be called in to work (on-call).