PHR Human Resources Exam Prep

Answer - A - If a company employee is earning a salary that is deemed to be excessive when compared to their counterparts of equal ability, their pay rate may be identified as a red circle rate.

Key Takeaway: A red circle rate occurs when a company employee is determined to be earning a salary that is above the maximum range for a job or when it is deemed excessive when compared to their peers. In the case of a red circle rate, the employee with the inflated salary may be ineligible for pay increases until the point when the maximum range for the position surpasses the employee’s pay level.