Legal Considerations

By Nancy Hatch Woodward May 1, 2012

May  CoverAlan Model, a shareholder in Littler Mendelson’s Newark, N.J., office, suggests looking at the following legal issues when conducting annual reviews of compensation structures:

Bias and discrimination issues. Review whether any of your lower-tier jobs are populated heavily by employees from protected classes. Even if it has happened inadvertently, employers must be able to show a legitimate business reason for this discrepancy. If they can’t, they need to conduct a thorough analysis of their compensation and job classifications.

Equal Pay Act. This statute requires that men and women in the same workplace be given equal pay for equal work. An employer may have the best compensation program in place but difficulty enforcing it. Employers need to make certain that once they set the rate for a position, they are actually hiring people effectively into that rate.

Americans with Disabilities Act. Job pay should be commensurate with the expectation of the job, regardless of potential disability. An employer cannot reduce the pay for a position if it hires someone who cannot perform all the functions, even if some of the functions are not essential.


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