February 2023 Volume 5

OPERATIONS & MANAGEMENT

Hiring? You May Be Required to Share Salary Up Front By Johanna Fabrizio Parker

be aware of demographic data within and among the bands. For example, you will now have data as to your most senior/executive band and theremay be no salary discrepancy in that band. But is that band comprised of all or an overwhelming majority of a particular gender or race? Having the data for salary purposes means having it – and understanding and being accountable for it -- for all purposes. I know – by now you are saying – what do you mean? We can’t consider an individual’s talents and value in deciding compensation? No, you can consider the person and his/her specific skills or experience in terms of sustaining pay differences. Specifically, the four “affirmative defenses” to an equal pay claim are that any pay difference is based on: “(a) a seniority system; (b) a merit system; (c) a system which earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.” 29 U.S.C. § 206(d)(1). The last defense is not defined specifically, but courts have found considerations such as education, qualifications, training or experience to provide a non-discriminatory reason for a pay difference. In short, I think both the new laws and expected legal landscape in this area provide good reason for employers to look (or look again) at compensation and how they determine it. It also may provide the opportunity for employers to add more structure in cases where the pandemic and related labor needs/availability drove compensation decisions and perhaps altered overall pay structure.

Are you telling me I need to include salary information in job postings? And give this same information to employees? Depending on where you are, yes. We are starting to see laws – in New York, California, Washington and Colorado – requiring employers to provide salary information in job postings. The stated purpose of these new laws is to increase pay transparency, and therefore, diminish pay gaps among groups, and specifically to reduce the gender pay gap. The information required to be shared depends on the particular law. For California and NYC, you need to provide a salary range. But in Colorado and Washington, you also need to provide general information about benefits and “other compensation to be offered” (undefined). As you might imagine, disclosure in one – very public context – practically means full disclosure. And just in case employees missed it in job postings, California also mandates that you provide the same information (i.e., the pay scale for the position in which the employee is employed) to current employees upon request. (There are other jurisdictions with a similar rule for applicants). In other words, my practical takeaway is that – assuming these laws impact you in some manner – you should be prepared to disclose even beyond the posting. You also should be prepared that employees will see and discuss this information. And I anticipate that these laws will only extend in scope and geography. This is not the first foray in legislatures’ mandating specific steps to combat pay disparity. There are multiple laws prohibiting employers from asking about an applicant’s salary history, which had been a common historical practice in making offers. And generally, the law protects employees in any discussion about pay. Under the National Labor Relations Act (NLRA), employees can communicate with other employees about wages, hours, and terms and conditions of employment. These conversations can be in person – or more frequently in today’s world – on social media. While you can have a social media policy, if your policy attempts to prohibit employees’ discussion of wages, it’s likely to run afoul of the NLRA. (See Your Right to Discuss Wages | National Labor Relations Board (nlrb.gov) for further information.) So, what do you do next? A first step may be a salary/pay audit: what do your employees make now, with focus on the same/similar jobs and whether there are disparities. For example, what is the range of salaries across each of your job titles? You need to look at the job – and not the specific abilities or qualifications of the person in it. There are market studies and other resources to assist you here. You can look to combine “like” jobs in certain bands, and then have associated compensation bands. If you do this, you also should

Johanna Fabrizio Parker is a partner in Benesch's labor and employment group. Her practice involves representing and counseling management clients in a wide range of complex employment matters, including claims of discrimination, harassment, and retaliation brought under federal and state law, as well as wage and hour claims, and matters involving noncompetition agreements and trade secrets. She can be reached at jparker@beneschlaw.com.

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