Closing the Gap: What to Do When Pay Falls Below Range Minimum

With the labor market as tight as it's been and budgets stretched thinner than most of us would like, we're once again hearing a familiar question: "What do we do about employees who are paid below the minimum of their range?" It's not something every employer deals with, but it's far from rare either, and how you handle it says a lot about your pay philosophy and your credibility as an employer. (If you're facing the opposite challenge, or have a mix of scenarios, see What to Do When Employees Hit the Top of Their Pay Range.)

This is also exactly the kind of situation where it helps to have a strategic partner in your corner, not just someone who hands you a spreadsheet of data, but someone you can actually bounce ideas off of, stress-test your approach with, and lean on for fresh thinking when budgets are tight and the "right" answer isn't obvious.

A salary range minimum isn't just a number on a spreadsheet; it's a commitment. It represents the least you believe a person in that role, at the minimum market rate, should be paid. When employees fall below it, a few things tend to show up. Employees paid below market for their role are easier for competitors to poach, and counteroffers have become a common enough response that many employers can't fully outrun the risk. This is especially true for lower-wage roles. If certain groups are disproportionately represented among your below-minimum population, that pattern is worth getting ahead of, even if no single case is a problem on its own. If what you're actually paying doesn't line up with your own stated ranges, whether or not employees can see those ranges directly, it undermines the integrity of the structure itself, and if you do share ranges, whether through job postings or internally, that gap becomes visible fast. Losing and replacing an underpaid employee is almost always more expensive than the cost of adjusting their pay would have been.

Before jumping into fixes, take a step back and ask why this is happening. Sometimes it's because your ranges were just updated with current market data, and that update raised the minimums faster than individual pay could catch up, so people who were previously fine are now below the new floor. Other times it's the opposite: your structure hasn't been touched in a while, and while that usually shows up as people being underpaid relative to the real market rather than technically below an outdated minimum, it's worth checking both. Are you hiring at the bottom of ranges, or below, to manage costs, and is that catching up with you? Is this concentrated in certain departments, locations, or job families, or is it showing up everywhere? Is it mostly newer hires, or are long-tenured employees stuck below minimum too? If it's a handful of employees, it may be manageable. If it's widespread, a market refresh alone won't solve it, it may even be part of what's causing it, so it must be paired with a real remediation plan. And for smaller employers, especially nonprofits or organizations without much payroll flexibility, that remediation plan may look different: budgets may not allow phasing in the way a larger organization could, so prioritization and creative, non-cash options tend to matter even more.

In a perfect world, you'd bring every below-minimum employee up to range right away. Budgets rarely allow that. When resources are limited, a phased, data-driven approach works better than an all-or-nothing plan, or worse, no plan at all. A few things worth building into that process:

• Identify the full population first. Pull everyone currently paid below their range minimum, tied to current, accurate ranges.
• Prioritize with more than one lens. Lowest compa-ratio, an employee's pay divided by their range midpoint, is a good starting point since those employees are typically furthest below market relative to their range, but it shouldn't be the only factor. Largest dollar gap can point to different people than compa-ratio does, and time spent below minimum, flight risk, and role criticality all matter too. Many employers land on a blended approach that weighs several of these together rather than picking just one.
• Model the cost in phases. Calculate what it takes to bring everyone to minimum, then model partial approaches, maybe closing half the gap in year one and finishing in year two, and run those numbers against your actual budget. This is another place where it helps to have a partner to model scenarios with, since the right phasing approach really does depend on your specific numbers and priorities.
• Watch for compression as you go. If you raise your lowest-paid employees without checking who sits just above them, you can end up with a newly adjusted employee earning close to, or more than, a more tenured or higher-performing peer. Build a compression check into every round of adjustments.
• Communicate the plan. Employees can handle "we're not there yet" far better than silence. If you're phasing in adjustments, tell people what to expect and when.
• Revisit regularly. Below-minimum situations tend to creep back if you don't monitor them. Build a check into your annual compensation review to catch it early.

Paying below range minimum should be a temporary, well-managed exception, not a standing condition. If it's happening broadly across your organization, that's usually a sign of a bigger structural issue, one that a market refresh alone won't fix, so pair any range updates with a clear, prioritized remediation plan rather than assuming new numbers will close the gap on their own. And if you're phasing in fixes over time, be transparent with employees about what's happening and why.

Getting pay right at the bottom of your structure isn't just about retention; it's about whether your ranges mean anything in practice. If you're working through how to prioritize, model, or communicate a plan like this, that's exactly the kind of conversation we like having. Reach out to our Compensation Team. We're not just here to hand you data; we're here to help you think it through.