Beware of Shrewd Wage Negotiators

Posted on Thursday, February 28, 2019

When you're bargaining over starting salaries or pay raises, be on sure footing or you might find yourself tumbling into a legal quagmire. If you succumb too easily to better-than-average negotiators, you may wind up running afoul of federal law.

Two simple tasks can help you avoid problems and ensure that you're paying a fair scale: Review your list of jobs and examine your starting salaries.

When salaries are skewed in favor of one group - say, white males - your company could be liable to charges of "disparate impact" or violations of the Equal Pay Act. Make sure each job opening matches a job description.

Update out-of-date jobs or those that are no longer relevant. If the responsibilities and descriptions of jobs don't tally, both new and senior employees with widely varying skills could make a case to demand equal salaries.

Once you review your descriptions and wages, run some statistics. Let's say you find your company is paying less to women and non-Caucasians. Compare their skills, experience and educational backgrounds with Caucasian males who hold the same jobs. If the skills and experience are roughly equal but the salaries aren't, you may be letting skilled negotiators get the better of you.

Even if the salary gap is small, you may find that time and regular raises produce a broad range of salaries in the future, with some discriminating against certain groups. To help avoid this, take the following steps:

Limit negotiation. Offer a consistent base salary with few individualized perks or pay step-ups.

Document salary decisions. Legitimate reasons exist for some pay discrepancies, particularly when you offer more money to experienced people with critical skills. Make sure there's a paper trail explaining the company's rationale.

Tighten job descriptions. Be certain you can distinguish between the skills and experience that warrant more money. Review salaries periodically to spot trends toward the low or high end of your salary range. Make adjustments if you find wages are skewed against a protected group.

By taking these steps, you'll help ensure employees are being paid what they're worth and you'll avoid the expense and hassle of labor disputes.

Posted in Tax Topics For Individuals, Tax And Accounting Topics For Business

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.