It’s Best to Discuss Issue of Pay Fairness When Hired

Question: I would love to know what my colleagues--those with the same job titles and years of experience--are paid, but I don’t know how to broach the subject. At my last job, a colleague once had occasion to peek at a pile of checks--and she flipped. The men were paid considerably more than women doing the same job. The result was a swift and whopping pay increase for females. How can we ensure pay equity if talking about our salaries is taboo?

--C.W., Long Beach

Answer: Equity or fairness of rewards is an important determinant of job satisfaction. It is also a very complex issue. Pay may be satisfying to an individual until he or she discovers that a co-worker with equivalent job performance, experience and education is receiving more pay. In deciding what level of pay is fair we consider what we contribute to the job and what we receive in return. But, we simultaneously compare our contributions and receipts to those of others. We are most satisfied when these ratios of contributions and receipts are equal.

It is important to understand that pay fairness does not mean pay equality. People holding the same job title may rightfully have different pay levels because of differences in training, performance ratings, seniority or experience.

Many organizations have a policy of pay secrecy, hoping that dissatisfaction arising from equity perceptions can be suppressed. Sometimes this policy can backfire in at least two ways. First, under conditions of pay secrecy employees tend to believe they are unfairly paid, even if the pay system is fair. Second, these same employees tend to underestimate the amount of pay their superiors are making. This perception may make promotion a less attractive incentive, and motivation to work hard for a promotion may be reduced.

If talking to your co-workers about pay is taboo, you might tell your manager about your concerns regarding pay fairness. It is possible that a formal pay structure exists that your boss might share with you. I would not recommend that you secretly try to look into personnel files for this information. This action would be an invasion of the privacy of your co-workers.

Issues of pay fairness are best handled at the time you are hired. You should ask how pay grades are determined and what it takes to move from one grade to the next. A pay plan that is formally structured with explicit rules for getting additional pay is likely to be perceived as fair. If the pay plan of a prospective employer is not well structured and this bothers you, seek employment elsewhere. Alternatively, an unstructured pay system opens the door for pay to be based on persuasiveness or other social skills.

--Tom Mays, professor of business management

Cal State Fullerton

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Question: My company has recently changed its policy about overtime pay. The policy says if an employee’s work hours in any week do not exceed 40 hours (except weeks with holidays), he or she will not be entitled to overtime pay. For example, if this week I take one day off or take one day as a sick day and I still work 40 hours, then I am entitled for my entire week pay plus eight hours of straight pay. Would you tell me whether its policy about overtime pay complies with labor law?

--J.J., Anaheim

Answer: You are fortunate to work for a company that offers its employees sick pay, holidays and vacation benefits. There are some federal and state labor codes that partially regulate fringe benefits, but an employer has no obligation to offer employees such bonus days. Companies, however, usually do have established benefit policies or have contracts for their employees to remain competitive in hiring.

It is accepted practice to pay these extra days at the employee’s regular straight time rate of pay. California’s wage regulations (except Wage Order No. 14, regarding agricultural occupations) require employers to pay overtime for hours actually worked in excess of eight hours a day or 40 hours in a work week. But these extra paid days, such as sick days, are not time worked, therefore the company policy appears to comply with labor regulations.

--Elizabeth Winfree-Lydon, senior staff consultant, The Employers Group