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
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
The Three Biggest Fears Keeping Retirees Up at NightHere are the steps you can take to put those fears to rest and retire with confidence so you can relax and enjoy the life you've planned.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Estate Planning When You Have International AssetsEstate planning gets tricky when you have assets and/or beneficiaries outside the U.S. To avoid costly inheritance mistakes, it pays to understand the basics.
-
Three Essential Estate Planning Steps to Protect Your Nest EggAfter dedicating years to building your wealth and securing your future, make sure your assets are protected and your loved ones are provided for in the future.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
Retiring With a Pension? Four Things to KnowThe road to a secure retirement is slightly more intricate for people with pensions. Here are four key issues to consider to make the most out of yours.
-
How to Teach Your Kids About the Tax Facts of LifeTaxes are unavoidable, so it's important to teach children what to expect. Also, does your child need to file a tax return for 2024? Find out here.
-
Revocable Living Trusts: The Good, the Bad and the UglyPeople are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
