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Merit Pay

This page provides examples of Washington local government policies that provide a merit pay system for their employees.


Overview

Most, if not all, employees, be they employed by a government agency or otherwise, hope for periodic wage increases. It is not uncommon for workers to be given a cost of living increase, recognizing that the cost of goods and services are increasing. Some jurisdictions will also recognize an employee's worth to the organization based upon his or her years of service and other jurisdictions may choose to base any wage increases that they may provide upon the "merit" that an employee has achieved. Has a particular employee met or surpassed all of his or her employment goals? Has the employee worked efficiently? Have the employee's achievements resulted in savings? Depending upon the employee's performance, he or she may be rewarded by a wage increase in recognition of the merit of the employee's work.

Practice Tip: Unless a merit pay system is carefully constructed, there is a risk that any additional wage provided in recognition of the employee's merit could be considered a gift, which would violate the state constitution. Thus, criteria for a merit wage increase must be adopted in advance of any work being performed so that an employee will know that if the criteria is met or exceeded, a wage increase will follow, not as a gift but in recognition that the certain work goals have been met.


Examples of Policies and other Documents

The following are some examples of merit pay plans that have been adopted by Washington jurisdictions, as well as additional documents that might provide some insight into merit pay related issues.

Policies

  • Bothell Employee Classification and Salary Plan (2011) - Provides that salary advances within a pay range, other than those received for promotions or as provided by collective bargaining agreements or the city’s salary administration policy, shall be based upon the employee’s annual performance evaluation.
  • Ellensburg Compensation Policy (2016) - Defines merit pay as an increase in pay of one step in the appropriate pay range, for the purpose of recognizing reliable achievement over time by the employee meeting or exceeding supervisory expectations
  • King County Executive Branch Performance Appraisal and Guidelines (2017) - Allows the appointing authority to grant multiple step increases for employees participating in the county’s performance appraisal system. The increase is based on a performance evaluation scoring system available in Appendix A of the guidelines.
  • Milton Compensation for Exempt Employees (2018) - Establishes that an employee’s salary may be adjusted within the established range based on an annual performance evaluation. Merit pay adjustment shall be recommended by an employee’s supervisor and approved by the mayor. Includes resolution amending policy.
  • Port of Seattle Total Rewards Program (2018) - Provides a range of increase options documented in a "Pay For Performance Matrix" for each performance rating determined by the performance review conducted by the manager or supervisor.

Other Documents


Recommended Resources

The following articles provide general background information reviewing the benefits of using a merit pay system and issues that should be considered in the development of a merit pay system.


Last Modified: March 25, 2019