MMHA 6220 Week 7 Pay Transparency Policy Example

Pay Transparency and Equity Policy for Bellwood Valley Home Health: Ranges on Every Posting, Placement Without Salary History, a Right to Ask and a Scheduled Compression Review

Student Name

Walden University

MMHA 6220: Human Resource Management in Healthcare

Instructor Name

Month Day, Year

Pay Transparency and Equity Policy for Bellwood Valley Home Health: Ranges on Every Posting, Placement Without Salary History, a Right to Ask and a Scheduled Compression Review

1. Purpose

This policy makes pay at Bellwood Valley Home Health predictable and explainable. It commits the agency to publishing pay ranges, setting starting pay by stated factors, answering employees' questions about their own pay and reviewing pay compression on a schedule. The agency is fictional, built from features common to small rural home health providers.

2. Scope

This policy applies to every posted position, internal and external, and to every current employee, including part-time and per diem staff.

3. Background

People judge fairness partly by comparison. In equity theory, employees compare the ratio of what they put into a job, such as experience, effort and skill, to what they get out of it, mainly pay, with the same ratio for others, and a perceived imbalance leads them to change their effort, seek a change in pay or leave (Adams, 1963). In a home health agency where aides talk with each other daily in the field, a newly hired aide earning more than a three-year aide is soon known, and the tenured aide's sense of unfairness is a reason to leave. Transparent ranges and placement rules do not eliminate comparison, but they make differences explainable.

4. Pay Ranges on Postings

Every job posting, internal or external, includes a good-faith pay range: the minimum and maximum the agency expects to pay for the position at the time of posting. Some jurisdictions require this. Colorado, for example, requires employers to include the hourly or salary compensation or range in each job posting (Equal Pay for Equal Work Act, 2024). Bellwood Valley adopts the practice in every location as its own choice, so applicants in every county receive the same information. Ranges are reviewed annually against market data by the HR manager. When a range rises, every current employee in the role whose pay falls below the new minimum is raised to it on the same date, so that a posting never advertises a floor that some current employees do not reach.

5. Placement Within a Range

Starting pay within a range is set by three factors only: years of verified experience in the same role, specialty certifications relevant to the position, such as a wound care certification for a nurse, and assignment to a hard-to-staff schedule, such as weekend or rural routes. HR documents the factors used for every offer.

The agency does not ask applicants about their prior salary, and it does not use prior salary to set an offer. Pay history can carry past inequities forward, and a person who was underpaid before should not be underpaid again for that reason. Applicants may share their pay expectations if they wish, and recruiters are told not to ask for them before an offer, so that the offer reflects the role and the placement factors rather than what the applicant was willing to accept.

Promotions and transfers

An employee who moves to a new role is placed in the new range by the same three factors, counting experience in the previous role where it is relevant. A promotion never results in pay below the employee's current rate. Temporary differentials, such as a rural route premium, are listed separately on pay statements so that they are not confused with base pay and do not distort comparisons.

Exceptions

An offer above the posted range requires the administrator's written approval and a stated reason. Every exception is recorded and included in the next compression review, so that one competitive offer does not quietly open a gap that tenured employees discover later.

6. Communication

Any employee may ask HR for the pay range of their position and where their pay sits within it. HR answers in writing within ten business days, including the factors that placed the employee where they are. Employees may talk about what they earn with coworkers; nothing in this policy or the employee handbook restricts that right, which federal labor law protects for most employees (29 U.S.C. § 157).

7. Compression Review

Pay compression occurs when the pay of long-serving employees in a role falls close to or below the pay of new hires, usually because starting rates rise faster than annual increases. Each year in October, before the budget is set, the HR manager compares pay within each role by years of service. The review flags any case where an employee with three or more years in the role earns less than the midpoint of the range or less than any employee hired in the past year with equal or fewer placement factors. Flagged cases are reported to the administrator with a cost to correct them, and corrections approved in the budget take effect in January.

Table 1

Compression Review Example, Home Health Aides

Rates are composite and illustrate what the review would find in an agency that raised starting pay to compete for aides.

The example shows why the review matters: aides with one to three years earn less on average than new hires, and those with more than three years earn barely more. Correcting the first group to the new-hire average and moving the second to a step above it would cost the composite agency about $28,000 a year, a fraction of the cost of the turnover that unequal pay invites.

8. Manager Training

Managers are trained to answer basic pay questions accurately and to refer detailed questions to HR. They are told plainly that they may not discourage employees from discussing pay, and that a comment such as "pay is private here" can violate the law and this policy.

9. Records and Review

HR keeps records of postings, ranges, offers and placement factors for at least three years. The administrator reviews this policy annually, and the HR manager reports compression review results to the board's finance committee each fall.

References

Adams, J. S. (1963). Toward an understanding of inequity. Journal of Abnormal and Social Psychology, 67(5), 422-436. https://doi.org/10.1037/h0040968

Equal Pay for Equal Work Act, Colo. Rev. Stat. § 8-5-201 (2024).

Rights of employees, 29 U.S.C. § 157 (2018).