Marc A. Mandelman, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in the Observer, in “New Laws Aimed at Closing the Gender Pay Gap Could Backfire,” by Courtney Vinopal.

Following is an excerpt:

Early last year Aaron Batilo, a Denver-area software engineer, discovered Colorado employers would be required to include pay ranges for job openings due to a new equal pay law. Though there were other laws in effect at the time that required companies to disclose salary ranges after a candidate had applied or interviewed for a job, or upon request, Colorado was the first state to enact a law asking for such information upfront.

The shift was likely to pose a challenge for businesses that have grown accustomed to setting salaries in an ad hoc manner over the years, and Batilo joked with friends that companies would start excluding job applicants from the state to avoid the headache of sharing salary information. “We assumed it was preposterous,” he said of that possibility.

But in May, a Reddit user noticed some companies were excluding Colorado applicants from applying for jobs. …

The exclusion of Colorado candidates by firms who weren’t willing or ready to comply with the state’s new salary rules is just one example of the unintended consequences associated with pay transparency laws. Batilo started a website called Colorado Excluded to document job postings excluding candidates from the state, and said at one point he was receiving 40 to 50 submissions a day. In total, Batilo estimates about 230 companies have appeared on the site. Listings that exclude Colorado candidates continue to trickle in …

But just because companies try to skirt these laws doesn’t mean they’re going away. In the coming months pay transparency laws are set to take effect in New York City, Washington State, and California, with implications for a much bigger group of employers and job seekers. Though legal and pay equity experts say efforts to exclude candidates from certain states are unlikely to continue, new unforeseen effects could arise as businesses work to comply with new laws. …

Unintended consequences for businesses

With some laws taking effect in mere weeks, employers need to get ready, said Marc Mandelman, an attorney and co-chair of the pay equity practice group at law firm Epstein Becker Green, based in New York City. “There is a lot of complexity that isn’t obvious,” he said of new regulations, “and there are going to be a variety of unintended adverse consequences” as companies manage the law.

For example, what happens when a company posts a job with a salary range, and a current employee with a similar role finds out they’re on the lower end of that range, or even making less? “That may cause some conflict and questions as to why they are not being paid at the top of the range,” said Mandelman. Revealing salary information could make it harder to retain employees, Mandelman said, and put businesses at higher risk of being sued for pay discrimination. …

Will greater transparency lead to better pay?

It’s not yet clear what effect salary transparency laws will have on pay inequities. A study published by the National Bureau of Economic Research in July of last year found such mandates may actually lead to lower average wages, as employers may decline to set high wage standards so they can avoid renegotiating salaries with underpaid workers once those become transparent. State-level transparency laws that allowed workers to share salary information with colleagues lead wages to decline by approximately 2 percent, the researchers found.

Still, other research suggests pay transparency laws can lead to positive outcomes, too. A study published by Nature in February, for example, analyzed salary data for 100,000 U.S. academics, and found the gender pay gap at transparent organizations was reduced by up to 45 percent, compared to those that didn’t disclose salary data. Inequality of pay also dropped by about 20 percent, as wage levels were compressed, with fewer outliers. …

As for the potential exclusion of candidates from certain locations, it seems unlikely that more employers will continue to seek workarounds, as was the case in Colorado, said Mandelman. The fact that most companies in New York and California will soon have to make pay transparent is likely to drive employers in other states and cities to do so as well. “The market conditions are going to cause most employers to make a good-faith effort to comply.”

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