I like to emphasize the importance that an employee’s personnel file accurately reflect the employee’s performance in reality.   When an employer’s defense of a personnel action is based on an employee’s poor performance, fact finders expect that the poor performance to be documented in the employee’s file.  Fact finders do not expect, without plausible explanation, to see satisfactory performance reviews and absence of written discipline or corrective action.

This brings me to today’s topic –accurately describing an employee’s increase in pay.  I frequently see increases in employee pay described in the personnel file as "merit increases" when they are not, in fact, merit increases.  When all employees receive a pay raise (e.g., 2.5 percent) and the increase is not based on an individual’s performance, it is my opinion that the increase should be characterized as a cost of living increase; longevity increase or something other than a "merit increase".   Merit increases suggest that the individual employee is performing at least satisfactorily.  If that is the case and wage rate increases are based on satisfactory (or even good to outstanding) performance then there is nothing inconsistent with characterizing the increase as being based on merit. 

It is difficult to explain to a jury or judge that an employee’s performance was poor when the employer has characterized the employee’s annual increases in pay as "merit increases".  It further undermines the employer’s position, potentially creating factual issues for the jury to resolve, when the employee lacks any written discipline, has satisfactory performance reviews, and shares in annual increases in pay (along with all other employees) that are characterized as merit increases.  Remember, the personnel file should reflect reality.  If an employee’s performance needs improvement, perhaps his or her wage increase should not suggest that it was earned based on merit.

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