December 29, 2023 • By Dennis Beaver
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, 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 as stated 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, 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 the issue by Southern California-based Marinor Ifurung, who is an HR consultant with the Klein.DeNatale.Goldner law firm. She provided this response: “The NLRA (National Labor Relations Act) gives employees the right to discuss their wages with their co-workers.”
So I called the partner and asked him if the word “gender discrimination” was part of his vocabulary, or if he had ever heard of the NLRA.
He hung up. 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.’”
As Stella didn’t do anything that needed to be forgiven, she 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. Businesses are required to be more transparent during the hiring process and often obligated to include the salary range and a job description in their postings.
“Job seekers are then able to make an informed decision about where they want to work. 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.”
Suspected of discriminatory wage gaps?
“All employers should examine their payroll practices to prevent unlawful discrimination,” he strongly recommends.
“Depending upon state law, a business that has discriminatory pay practices is looking a three consequences:
(1) A government investigation, by the Department of Labor or another agency that enforces workplace and labor laws, in which they may be subject to a penalty in the form of monetary fines.
(2) A requirement to provide back pay to those workers impacted by the discriminatory pay practice.
(3) And if there is a private right of action, that business is also looking at a potential civil suit by the impacted workers themselves, for 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. Greater benefits that are now guaranteed to workers through legislation, such as sick leave and safe leave — and expanded protection for the gig economy and independent contractors.”
There is a downside to these laws
“Not everyone is going to be happy with pay transparency laws,” Kelly was quick to acknowledge. “These and other workplace legislation creates 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.”