Now that the Lilly Ledbetter Fair Pay Act is the law of the land, it may be time to revisit how you set starting and incumbent salaries.
If you currently allow managers and supervisors flexibility on pay issues, consider reducing that discretion. It may be better to have clear rules for setting salaries that rely on objective factors like education, specific experience and training. That’s better than using vague terms like “salaries may be adjusted in exceptional circumstances.”
Here’s why: Those “exceptional circumstances” may seem like illegal discrimination to employees who don’t get extra pay or benefits.
In the following case, the employer stuck with its salary-setting rules and never actually tried to justify higher pay by using an “exceptional circumstances” exemption included in its handbook. It won the case.
Recent case: Raffaela Gibbard, who was over age 40, applied for reinstatement to the U.S. Postal Service after a hiatus. She was rehired and her salary was set according to the Post Office Employment and Labor Relations Manual. That manual placed her at the first step of the position she was hired for. But the manual also allowed employees to be rehired at a higher salary under “exceptional circumstances, as authorized by the installation head.”
Gibbard sued when she concluded that others outside her protected classes (sex, age) had been reinstated at higher rates.
But her case was quickly dismissed when the post office told the court it had never used the exception to deviate from the salary formula. The reason: It didn’t want to be unfair to anyone. (Gibbard v. Potter, No. 5:05-CV-44, WD NC, 2009)
Final note: Is there discrimination lurking in your employees’ paychecks? Remember, employees can now file a pay discrimination lawsuit after each paycheck that reflects allegedly lower wages based on a promotion or hiring decision made years or decades ago. Consider a comprehensive review to rectify any differences once and for all. Remember, though, that the Equal Pay Act says you can’t cut higher salaries to fix inequalities.