Disparities in Pay Can Affect Office Morale

Question: The department in which I work has staff members who were hired at various times over the last 10 years. Their starting pay rates reflected the job market and experience at the time they were hired.

New hires with no experience are coming in at several dollars an hour more than what others in the department are making, even though these existing employees have a couple years’ experience and are strong contributors.

Companies do not generally correct these disparities just for the sake of paying everyone consistent rates. Attempts at correcting the disparities during performance reviews are difficult at best. Someone would have to be outstanding to get the lion’s share of the funds available. Newer staff members at higher pay rates who have done well also expect to be fully acknowledged for their contributions.

How can we keep seasoned staff and have employees feel they are treated fairly? I do not want to see a seasoned staff member leave us to receive pay consistent with the current job market.

--T.L., Newport Beach

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Answer: Research has shown that perceptions of equitable treatment in the workplace, including feelings that one is being compensated fairly in comparison to others, can have a major impact on work motivation and job satisfaction.

Some workers, especially those who are more sensitive to equity/inequity issues, may try to find ways to “even the score” by reducing their work output, by being tardy or absent more, or by being less concerned about the quality of their work.

If the inequity is perceived as extreme or unchangeable, workers may look for employment elsewhere. If the inequities continue, this is always going to be a concern.

One way to correct the disparities is to think about job rewards more broadly. Rather than just focusing on pay, are there other kinds of “compensation” that can be given to the more senior employees, such as additional benefits or bonuses, more flexible working schedules or extra vacation days?

It is also important to be upfront with workers about the situation. Let them know that you are trying to make the situation more equitable.

--Ron Riggio, director

Kravis Leadership Institute

Claremont McKenna College

Company Employee vs. Independent Contractor

Q: What is the difference between an independent contractor and a company employee?

I work in new-home sales for a builder and receive a daily pay rate. My employer defines the entire sales staff as independent contractors and gives us a 1099 form, with our compensation stated as nonemployee expense. There are no payroll deductions.

But we are required to fill out a time card every two weeks, and have to report in at 9:45 a.m. and stay there until 6 p.m.

--G.B, Chino Hills

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A: This is an area where many employers make mistakes. Many assume that just calling someone an “independent contractor” makes them one, and that, by signing an agreement with someone provided they are an independent contractor, the employer can avoid normal employment responsibilities, such as making withholding deductions, paying overtime and worrying about laws prohibiting employment discrimination.

Not true. Whether someone is an independent contractor depends on a variety of factors; the most important are:

* Who really controls how the job is done? If the employer sets the hours, describes how the tasks are to be accomplished, disciplines/directs the individual when it is not done to the employer’s satisfaction, then the relationship is probably one of employer-employee, not independent contractor.

* Does the individual have any investment in tools, equipment, etc., or does the employer supply all necessary materials for the job? The less investment the individual has, the more the relationship looks like one of employer and employee.

* Is the work part of the employer’s normal business or is it not related to normal operations? Someone hired to fix the plumbing in the employer’s plant more likely would be considered an independent contractor than someone hired to work alongside the employer’s other regular employees, performing an integral part of the normal workload.

* Is the individual required to do the work himself, or can he hire others to assist him? If the individual must do the work himself, he is more likely an employee than an independent contractor.

* Is the individual allowed to work for others? If he is required to work exclusively for one employer, he is more likely an employee.

* Does the individual possess any specialized skills or knowledge? If not, he is more likely to be considered an employee.

The more factors in your case point to employee status, the more likely it is that you are an employee.

--Michael A. Hood

Employment law attorney

Paul, Hastings, Janofsky & Walker

Company Policy on Providing Insurance

Q: I am on state disability insurance because of stress on the job from harassment by management. I have been denied workers’ compensation once, and we are in the process of appealing that decision. After paying medical insurance for six months, my employer says it will no longer pay the premiums.

The company policy is to pay medical for all employees. Can they do this to me?

--J.C., Santa Clarita

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A: The test is not whether the company policy is to pay the costs of providing medical benefits to active employees. The relevant test is whether the company has a policy of paying these costs for individuals who are out on disability leave for more than six months for reasons other than SDI.

If the employer does not do so, it is not obligated to provide such coverage for you.

--Kirk F. Maldonado

Employee benefits attorney

Riordan & McKinzie

If you have a question about an on-the-job situation, please mail it to Shop Talk, Los Angeles Times, P.O. Box 2008, Costa Mesa, CA 92626; dictate it to (714) 966-7873; or, e-mail it to shoptalk@latimes.com. Include your initials and hometown. The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice.

More on Benefits

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