Q. I have a question about capping employees’ salaries when they reach the top of the pay scale. I’m concerned because the only employees affected are those with many years of service and who happen to be over age 40. Have we made a legal error? Some of the affected employees are angry and have mentioned discrimination based on the residual effect of the cap?
A. It is permissible to cap employees’ salaries if you do so consistently for all employees who reach the top of the pay scale. If you cap salaries only for certain jobs, you need to examine the business reasons for doing so for some jobs but not others.
However, this practice presents a potential employee-relations issue, and you should consider whether there are any steps you can take to address employee dissatisfaction.
Are the pay scales in line with the market? Are there other ways to reward employees who are at the top of their pay scales?