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What factors can justify pay disparity?

On Behalf of | Sep 18, 2023 | Employment Law

Despite being in the same company, each employee can have varying qualifications and responsibilities, potentially affecting the value of their wages. Compensation can be challenging to discuss, especially when some employees feel adversely affected by specific pay-related decisions.

Other employees discovering that some received pay increases might create hostility and lead to misunderstandings. Additionally, these changes could seem discriminatory based on the circumstances. In these sensitive situations, employers can clarify their positions and justify their decisions using the following factors:

  • Seniority
  • Merit-based wage increase
  • Performance, including both quality and quantity of output
  • Other qualities based on employee competence, such as skills, experience, training, licenses, certifications and education

Using these justifications should logically relate to the employer’s decisions. If the basis of the increase is competence, their job description should be relevant to their recently obtained qualifications. It could be difficult to justify if the reason behind the raise does not make sense.

In some cases, proper performance monitoring is vital for wage increases related to work output. This factor can only be reasonable if employees receive performance reviews regularly. They should also be aware that these results may contribute to possible salary increases. If not, it might not be justifiable.

Conversing about wages and possibilities of disparity

Some employers might want to keep wage details confidential to respect their employees’ privacy, but they cannot force them to stop having salary-related discussions. California’s Fair Pay Act protects employees’ rights to disclose their wage information to others.

Prohibiting employees from doing so could be unlawful. Instead, employers could have these discussions and maintain transparency about factors impacting eligibility for wage increases. These conversations help avoid misunderstandings and complaints when deserving employees receive higher pay than others.