Have you ever thought that it would be nice to know what other employees who have the same job duties as yours are paid? Or to know what a company pays its other employees before you accept a position there?
That’s what recently minted attorney “Stella” thought, but her employer forbade discussing compensation that was in the onboarding handbook that “appeared to have been written many years ago,” she told me. At an office Christmas party, an intoxicated colleague boasted what he was earning — which was far more than Stella was, and he was also a new lawyer doing the same things. Another employee overheard them talking about this and told a senior partner, who put Stella on administrative leave.
This infuriated me. I ran this issue by a friend of this column, Southern California-based HR consultant Marinor Ifurung, and she provided this response: The NLRA (National Labor Relations Act) gives employees the right to discuss their wages with their co-workers.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
So I called the partner and asked him if the word “discrimination” was part of his vocabulary, or if he had ever heard of the NLRA.
He hung up on me, but two minutes later, Stella phoned and said, “The partner just called! ‘Please keep Beaver away from me! Come back to work. All is forgiven.’”
Though “all is forgiven” probably wasn’t an appropriate response, since Stella didn’t do anything that needed to be forgiven. Also, if her co-worker is indeed a new lawyer who is paid significantly more than she is for the same work, then she also should be given a raise.
'Workers are free to discuss their salary'
“In many states, including California and New York, that type of reprimand by the employer can’t happen,” observed attorney Steven Kelly, former associate commissioner at the New York City Department of Consumer and Worker Protection. “Workers are free to discuss their salary as part of the new wave of pay transparency laws spreading across the country. Any employer that retaliates against employees who discuss compensation faces civil penalties and is best advised to knock it off.”
Kelly, a lecturer for LearnFormula, a provider of continuing education courses for many state bars across the country, explained the reason behind pay transparency laws: “The goal is to promote equity and fairness in compensation practices when workers want to discuss their own salaries, and businesses are required to be more transparent during the hiring process. The business is often obligated to include the salary range and a job description in their postings. These laws allow job seekers to make a more informed decision about where they want to work. In addition, such transparency prevents a business from determining the salary for an applicant based on who the applicant is. Therefore, the laws work to prohibit discrimination based on the race, ethnicity or gender of the applicant.”
What if a business is suspected of discriminatory wage gaps?
I asked Kelly if these laws require employers to affirmatively examine if they appear to be paying employees performing similar work differently based on race or gender. And what can happen if an employee files a complaint with an appropriate state or federal agency?
“All employers should examine their payroll practices to prevent unlawful discrimination,” he said. “Depending upon the state law, a business that has discriminatory pay practices is looking at two different things. One, a government investigation, whether it be by the Department of Labor or another agency that enforces workplace and labor laws, in which they may be subject to a civil penalty in the form of monetary fines. They may also be required to provide back pay to those workers impacted by the discriminatory pay practice, depending upon the state. And two, if there is a private right of action, that business is also looking at a potential civil suit by the impacted workers themselves, where they will be seeking some monetary damages for being subject to those discriminatory pay practices.”
“Unfortunately,” he added, “the wage gap continues to be an issue in terms of gender, ethnicity and race, despite a number of laws at the federal and state levels that have been enacted to remedy that wage gap. The issue still persists despite a growing and more powerful labor rights movement in recent years whereby workers are gaining more leverage in that unequal power dynamic between employers and employees.
“We are seeing increased unionization efforts at high-profile companies, such as Amazon and Starbucks, and greater benefits that are now guaranteed to workers through legislation, such as sick leave and safe leave — and greater protection for the gig economy and independent contractors.”
Is there a downside to these laws?
Kelly was quick to acknowledge that not everyone is going to be happy with these pay transparency laws. “These and other workplace laws are creating a much more challenging regulatory environment for someone who wants to launch a new business — especially a small business — or a business that operates in multiple states. However, any business that does not have some type of in-house compliance team or doesn’t have outside counsel retained who can just answer a question for them about pay transparency laws can find themselves in hot water easily.”
Kelly’s recommendation for business owners? “You’ve just got to keep yourself informed.”
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
Related Content
- Four Easy Ways to Get Yourself Fired
- Looking for a Job? Here’s How Not to Get Hired
- How to Deal With Employees Who Stink (Literally)
- Can an Employer Fire an Employee for Not Wearing Glasses?
- Are You an Emotional Miser With Your Employees?
-
Don’t Miss Apple and Walmart Back-to-School Tax-Free Holiday Savings this SummerSales Tax Select states host sales tax holidays during the summer. Here’s what you can purchase.
-
The Rule of Retirement InversionThe rule of retirement inversion says that to have a great retirement, you must ask yourself what would ruin a great retirement — and then plan to avoid it.
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case StudySusan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every AgeFrom toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your PortfolioAlternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
A Financial Planner's Guide to Unlocking the Power of a 529 Plan529 plans are still the gold standard for saving for college, especially for affluent families, though they are most effective when combined with other financial tools for a comprehensive strategy.
-
An Investment Strategist Takes a Practical Look at Alternative InvestmentsAlternatives can play an important role in a portfolio by offering different exposures and goals, but investors should carefully consider their complexity, costs, taxes and liquidity. Here's an alts primer.
-
Ready to Retire? Your Five-Year Business Exit StrategyIf you're a business owner looking to sell and retire, it can take years to complete the process. Use this five-year timeline to prepare and stay on track.
-
A Financial Planner's Prescription for the Headache of Multiple Retirement AccountsHaving a bunch of retirement accounts can cause unnecessary complications. Consolidation can make it easier to manage your savings and potentially improve investment outcomes.
-
Overpaying for Financial Advice? A Financial Planner's Guide to FeesTake five minutes to review how much you're paying for financial advice. If you're overpaying, you could be better off with an adviser who charges a flat fee.
