Is it OK to impose a salary cap? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Is it OK to impose a salary cap?

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in Compensation and Benefits,Human Resources

Q. Many of our employees have reached the top of the current pay scale. We just instituted a salary cap. The only employees affected are those with many years of service and are well into their 50s and beyond. Some of the affected employees are angry and say this is age discrimination.

A. It is permissible to cap employee’s 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.

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?

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