With The Best Of Intentions , Rhode Island’s New Pay Equity Law May Have Serious Unintended Consequences
Rhode Island Governor Daniel McKee recently signed significant pay equity legislation into law that could be both a game changer to the corporate world and have serious unintended consequences.
Past standard practices would entail that a business would offer a certain premium over what a candidate currently earns to entice them to leave their firm and join the company. The problem for many people was that they were underpaid. If you started at a low salary and received a measly 2% yearly raise, it would take decades to bolster your compensation. Even with a bump up in salary, they’d still be below market wages.
Now in Rhode Island, you don’t have to disclose your compensation. Instead, you can demand what you want. This new law could greatly benefit a candidate who is at the top of their field, but earning considerably less than what is being offered for a similar job with a competing firm. A number of states already have this rule in place. The states that don’t will generally abide by this law, as it's good and fair business practices.
The second part of the legislation could be groundbreaking. It calls for pay transparency in the workplace, which sounds simple and reasonable. We all could agree that workers should be fairly paid regardless of their race, religion, color, age and other characteristics. headtopics.com
The law prohibits an employer from paying any employee less money because of “race, or color, or religion, sex, sexual orientation, gender identity or expression, disability, age or country of ancestral origin” for doing the same job. Once again, at face value, this seems obvious, reasonable and fair. There will be tough penalties if businesses don’t adhere to this rule.
According to Joshua Nadreau, a partner in the Boston office of the labor and employment law firm Fisher Phillips, Rhode Island’s statute is “one of the few pay equity laws that targets protected classifications other than sex or gender.”Nadreau posits, “This may add considerable burdens to employers who may not have historically tracked this demographic information. How many employers track the religion or sexual orientation of their employees? One of the questions I have is whether an employer will be held legally responsible for a pay disparity between various protected classes if it doesn’t even possess the information to make that determination in the first place.”
This could be both great and potentially set a dangerous precedent. A lot of people will benefit from seeing higher salaries. They’ll be more comfortable and successful interviewing with the new openness and transparency. It will level the playing field.
The challenge could be that it's not so easy to compare workers. You can have two employees working side by side. They both started the same day and do similar work. We‘ve all seen this in the workplace. One of the two is a rockstar and does amazing work and consistently exceeds expectations—the second, not so much. How fair is it to pay them both the same? headtopics.com
As Nadreau notes, “While the law envisions defenses for pay disparities based on ‘merit,’ how that will work in practice could be a nightmare for managers forced to constantly document reasons why employee A is a rockstar and employee B barely meets expectations. In the absence of implementing regulations or judicial guidance, the nebulous nature of ‘merit’ could prove difficult to establish if a complaint were filed.”
There is also a great deal of subjectivity involved too. A manager may think one of their staffers is amazing. Meanwhile, their co-managers are not too thrilled with the person’s abilities and performance. Who hasn’t interacted with a co-worker who thinks that they are head and shoulders above everyone else, and really believes this, while their bosses clearly disagrees with this self-assessment.
Feeling aggrieved, you can envision people complaining that they are not being treated fairly, as they deserve more than their lazy co-workers. It feels that this law would push toward socialism in the workplace, in which people are paid the same regardless of their productivity. This could ultimately lead to internal animosity and, eventually, lawsuits.Read more: Forbes »
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