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How are Discussions about Salaries Changing?

Human Resources
Article
03/27/2018

Changing attitudes and the call for pay equity – the topic of whether men and women are paid the same compensation for performing the same job – are just a few factors affecting the way compensation is discussed among peers.

While employee compensation can be a particularly sensitive subject, many employees and employers today are finding ways to share information and encourage open discussion about how workers are paid. The National Labor Relations Act (NLRA) prohibits employers from limiting employees’ concerted activities for the purpose of “collective bargaining or other mutual aid or protection.” According to the National Labor Relations Board, employees discussing compensation is generally viewed as a concerted activity. Some states have also enacted laws prohibiting employers from limiting wage discussions.

The U.S. Bureau of Labor Statistics reported that median weekly earnings for women ($749) were 82 percent of the median weekly earnings for men ($915) in 2016 – an indication that efforts toward pay equality are still a work in progress.

According to Paychex area manager Matthew Keup, there is a notion that employees discuss salary in an attempt to identify unfairness. For instance, they may ask, "Why is my pay equal to this amount while another employee is getting compensated differently?" In Keup's experience, many factors can affect pay differences, including, but not limited to:

  • Market conditions: As the supply and demand for workers in a particular job ebbs and flows, starting salaries may also need to change in order to attract new talent.
  • Wage compression: Long-term employees may follow a previously-established scale for raises and salary adjustments, while the company may need to increase hiring wages to attract new employees.
  • Management inconsistency: Application of merit or performance appraisal practices by management is to some degree a subjective process and may change slightly between managers or departments, resulting in differing compensation.

While many employers may want to maintain flexibility within pay ranges, avoiding a compensation discussion likely isn't the best approach. Keup notes, "There are also federal along with some state and local regulations that prohibit the practice of suppressing discussions about salary at work.”

The federal Equal Pay Act of 1963, aimed to abolish wage disparities based on sex. Some states are proposing to strengthen or enact requirements for equal pay, such as in Massachusetts. The Massachusetts Act to Establish Pay Equity, which goes into effect this year, amends the Massachusetts Equal Pay Act by providing more clarity as to what constitutes unlawful wage discrimination and adding protections to ensure greater fairness and equity in the workplace. This includes but is not limited to prohibiting employers from asking job candidates about salary history, as well as giving businesses incentives to perform salary self-evaluations.

Working toward meaningful discussions about compensation

Establishing an open environment for salary discussions can bring about changes in compensation practices. In recent years, pay equity has been one driver behind the movement toward a greater sharing of salary information. The U.S. Bureau of Labor Statistics reported that in 2016, the median weekly earnings for women ($749) were 82 percent of the median weekly earnings for men ($915) – an indication that efforts toward pay equality are still a work in progress.

Adjusting to changing attitudes about salary discussions

As younger generations enter the workforce, they can also bring their own perspective on salary transparency. In an effort to make sure they're being paid fairly, these workers may feel more comfortable discussing salary at work. Information gleaned from such discussions could be used to compare and analyze pay differences.

Some best practices regarding employee compensation include:

  • Scrutinizing company pay scales to ensure that employees performing equal or substantially equal work (depending on the applicable law) are paid equally, regardless of gender, race, religion, age, protected class, or other irrelevant criteria.
  • Periodically reviewing your hiring policies and employment applications, and updating them as necessary to comply with applicable laws and regulations.
  • Training supervisors on nondiscrimination laws, and providing instruction on appropriate interviewing questions.

When considering pay transparency and salary discussions, employers should ensure their in-house policies are in compliance with applicable laws and that they review current salary guidelines for individual job positions. Those looking to determine if there are any steps needed to remain in compliance may wish to use HR consulting services for assistance.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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