Tag: Human Resources
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The End of Pay Secrecy?
hreonline.com
By Julie Cook RamirezEmployers are under pressure to divulge salary information. Could one of the last workplace taboos be going by the wayside?
Thursday, February 4, 2016
You are not to tell anyone how much you’re paid.
It’s an unwritten rule at many companies, while other employers openly inform their employees they are not to share salary information with colleagues. A 2010 Institute for Women’s Policy Research/Rockefeller Survey of Economic Security found half of all workers were either “explicitly prohibited or strongly discouraged” from discussing pay with their coworkers.
That may all be changing, as employees are increasingly seeking to discuss pay issues both inside and outside company walls. In large part, the trend is being driven by social media, coupled with the emergence of millennials in the workplace, according to Kevin Hallock, director of the Institute for Compensation Studies at Cornell University in Ithaca, N.Y., and author of Pay: Why People Earn What They Earn and What You Can Do Now to Make More. Younger employees, in particular, are comfortable sharing virtually every detail of their lives, he says, so divulging their salary doesn’t seem like a breach of privacy.
It’s not just employees who are openly discussing compensation. A small but growing number of employers are making such information available, either internally to the workforce at large or externally, posting all workers’ salaries on their websites for the world to see. The most widely publicized example is Austin, Tex.-based Whole Foods Market, which allows employees to view information on pay and bonuses for everyone from the CEO down. The policy was introduced by then-co-CEO John Mackey in 1986, just six years after the natural-food retailer’s inception. The goal was to encourage competition by helping employees understand why some people are paid more than others. If workers understood what types of performance led to greater compensation, Mackey reasoned, they would be motivated to adopt similar workplace behaviors themselves.
While Whole Foods is a notable exception, the trend toward pay transparency is almost exclusively limited to “small tech-y companies,” according to Ed Lawler, director of the Center for Effective Organizations at the University of Southern California’s Marshall School of Business in Los Angeles. For the most part, large companies have shied away from the idea, instead adopting a “what you don’t know won’t hurt me” attitude, says Lawler. That’s unfortunate, he says, because they have much to gain from sharing pay information with the workforce.
“They seem to be stuck in the mindset of If I don’t have to defend it, life is better and people are happier,’” says Lawler. “If you have a reasonably administered pay system that meets a certain agenda, like pay for performance, and it’s defensible, you are better off from an organizational effectiveness point of view of making that clear and visible to people. It’s a big credibility builder.”
While Hallock sees more employers “experimenting” with pay transparency than ever before, he agrees that “most organizations are very reluctant” to divulge salary information. Usually, that’s because they fear the “chaos that might come with it,” he says, as employees learn they are making less money than colleagues they consider their inferiors. That bedlam can be avoided by adopting an approach in which salary information is accompanied by the opportunity to ask questions, learn more about the connection between pay and performance, and map out a plan for increasing their own earning potential, according to Sarah Moore, a partner in the Cleveland office of Fisher & Phillips.
“To the extent that you can have a conversation with the employees and provide each of them a context for where they are in the scheme of things, that’s always a preferred approach, rather than just putting it up on the bulletin board,” says Moore.
That’s the approach taken by Whole Foods. Rather than posting such data on the company intranet for easy access, the retailer requires employees to make an appointment with an HR manager to see others’ salary information. That enables the retailer to achieve its goal of bolstering employee performance through pay transparency.
Even if an employer chooses not to officially divulge compensation data, technology is enabling employees to disseminate such information themselves via anonymous interoffice messenger apps like “Get the Memo” or websites such as Glassdoor.com, where current and former employees review companies and their management. One enterprising Google employee simply created an Excel spreadsheet where employees could plug in their salary information.
While conventional wisdom may frown on such activities — and some employers might seek to squelch them — they could have no choice but to accept pay transparency as a component of the 21st century workplace. Legally speaking, says Moore, employees have every right to tell anyone they choose how much they make. Section 7 of the National Labor Relations Act makes it legal for employees to discuss the terms and conditions of their employment with each other. That includes salary and benefits.
The end of pay secrecy is inevitable, says Moore. She advises employers to get in front of the issue and begin laying the groundwork for a smooth transition into the world of pay transparency.
“The first step is to make sure the most-valued employees are compensated in a manner that is reflective of objective fairness so that when that information is rolled out, they don’t have a situation where a lot of angry people feel burned and ready to walk out the door,” says Moore. “The key is to make sure it’s done in a measured way, keeping an eye on retention of the most valued employees and recognizing you are going to have some people who just aren’t happy regardless.”
Send questions or comments about this story to hreletters@lrp.com.
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Terminating an Employee on FMLA Leave
By Keisha-Ann G. Gray
Question: My organization would like to terminate an employee who is currently on FMLA leave, for reasons unrelated to the leave. Can we properly lay off this employee?
Wednesday, June 3, 2015
Answer: Under the Family and Medical Leave Act (“FMLA”), which applies to employers with 50 or more employees within 75 miles, covered employees who are on qualified leave have a right to be restored to the same, or an equivalent, position upon their return. 29 U.S.C. § 2614(a)(1) (1993). Further, employers cannot use the taking of FMLA leave as a negative factor in employment actions such as hiring, firing and promotions. See Wage and Hour Division, FMLA Fact Sheet, United States Department of Labor. However, this does not mean that an employee on FMLA leave is immune from termination. To the contrary, “an employee has no greater right to reinstatement or to other benefits and conditions of employment than if the employee had been continuously employed during the FMLA leave period.” 29 C.F.R. § 825.216.
Prior to terminating an employee on FMLA leave, an employer should consider carefully whether it would make the same termination decision even if the employee did not take leave. Indeed, if the termination is challenged, the burden will be on the employer to prove the leave was not a factor in the decision. Accordingly, it is critical to keep sufficient documentation that supports the business decisions behind the termination. Below we describe some of the applicable case law that provides employers with examples of situations that may provide legitimate, non-discriminatory reasons for terminating an employee on FMLA leave and underscores the importance of maintaining relevant documents.
First, a corporate re-organization may qualify as a legitimate reason for terminating an employee on FMLA leave, provided that the re-organization is not merely a reaction to the employee taking the leave. See Yashenko v. Harrah’s NC Casino Co., LLC, 446 F.3d 541, 551 (4th Cir. 2006). Nonetheless, an employer still must be sure to document the specific business decisions and determinations behind a corporate re-organization in order to avoid potential FMLA violations if an employee on leave is terminated. For instance, in Brenlla v. LaSorsa Buick Pontiac Chevrolet, Inc., No. 00 CIV. 5207 (JCF), 2002 WL 1059117, at *2 (S.D.N.Y. May 28, 2002), an employer decided to consolidate two job functions, thus eliminating the position of an employee on qualified FMLA leave, three days after the employee formally requested to return to full-time work. The employer argued that the “re-organization” was motivated by legitimate business concerns. Id. at *5. However, the jury found, and the court upheld, there was no documentation or evidence showing any financial benefits from the consolidation or indicating how the employer chose which employee was best suited for the new consolidated position. Id. Instead, the temporal proximity to the employee’s request to be reinstated and the employer’s decision to consolidate the positions supported the conclusion that the restructuring would not have taken place had the employee not taken FMLA leave.
Second, courts have held that an employee’s poor performance may qualify as a legitimate reason for terminating an employee on FMLA leave. See Mercer v. Arc of Prince Georges Cnty., Inc., 532 F. App’x 392 (4th Cir. 2013) (upholding employer’s decision to terminate an at-will employee for poor performance, despite the employee being on FMLA leave). Again, documentation, such as performance evaluations, likely will be instrumental to ensure that the termination is not viewed as retaliation for taking FMLA leave. See Richmond v. Oneok, Inc., 120 F.3d 205, 209 (10th Cir. 1997) (ruling that the employee was not terminated for taking FMLA leave, but instead was properly terminated based on 15 documented incidents of poor performance). A prudent employer should make sure that it has documentation indicating not only the reason for the termination, but also why the termination decision was not made prior to the employee’s request for (or taking of) FMLA leave. Even with sufficient documentation, some employers choose to wait until the employee returns to work before taking an adverse employment action to avoid the inference of retaliation. Simply waiting until an employee returns from work, however, will not insulate an employer from a retaliation claim. Even if performance issues are well-documented, an employer should evaluate the timing of a discharge of an employee who recently took FMLA leave to avoid even the appearance of a retaliatory motive. Of course, an employer might not become aware of performance issues or policy violations until the employee goes out on FMLA leave. In that situation, the employer likely will be within its right to terminate the employee immediately, even if the employer discovered the misconduct from the employee’s leave replacement. See Cracco v. Vitran Exp., Inc., 559 F.3d 625, 636 (7th Cir. 2009).
Furthermore, a reduction in force is likely to be considered a legitimate reason for terminating an employee on FMLA leave. If a reduction in force results in the termination of an entire department or division, depending on the size of those groups, it will usually be sufficient to show that there was no discriminatory animus to eliminate an employee on FMLA leave. However, if a reduction in force is employee-based, instead of group-based, the employer will want to produce significant documentation indicating how and why each laid off employee was chosen. See Roll v. Bowling Green Metalforming, LLC, 457 F. App’x 458, 460 (6th Cir. 2012) (upholding the termination of an employee on FMLA leave because the employer produced significant documentation that the employee’s selection for inclusion in the reduction in force was based on objective criteria including skills, performance and work history).
Overall, the main takeaway from the case law for employers is that it is not only important to have legitimate, nondiscriminatory business reasons for terminating an employee on FMLA leave, but employers should also make certain they have adequate documentation supporting the business decisions behind the termination.
Patrick Lamparello is a senior counsel in Proskauer’s labor and employment department in New York. Proskauer Associate Ian Plummer assisted with this article.
