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Bruce Bialosky

You’re Really Paying That Much?

Our society has created a class of people with too much time on their hands. That has caused such recent sensations as the USC School of Social Work determining the word ‘field’ should be banned from the lexicon because of “possible racist connotations.” Another decision that affects society is legislatures determining how pay should be handled by private entities because of some perceived potential inequity.

The issue at hand is new laws requiring inclusion of the salary range for any open positions.

Nothing irritates some people, especially me, more than having state legislators tell people how to run their businesses. It is particularly galling since few have ever worked in private industry and fewer have run a business with all the accompanying challenges.

California’s legislators are not the first to wade in on this particular subject. Colorado adopted a law in 2019. As these matters go, it spread like a swarm of locusts even before there is time to analyze the effects of the new decree. New York City, which envisions itself a state as California envisions itself a country, was next to step into this mire. California had to follow suit because that is what the state legislature does.

In California, Senator Monique Limon authored the law to require disclosure of pay ranges for any company with 15 or more employees. A review of Ms. Limon’s work experience shows no material work experience in the private sector and certainly none running a business. Despite that she purports to having great insight into how employees are treated by privately held companies. She probably held hearings where people who also had no private industry experience pontificated on the topic in a scholarly manner. They probably had “experts” testify.

In offering the legislation, Ms. Limon stated “Pay transparency is key to achieving pay equity. SB 1162 will help identify the gender and race-based pay disparities by requiring pay transparency at every stage of the employment process, from hiring, to promotion, and ongoing employment. We must increase pay transparency in order to close the gender and racial wage gap, which prevents women, particularly women of color, from achieving economic security.”

Since the law does not require specific ranges for a position, companies like Netflix post positions that have a salary range of $50,000 to $600,000 or between $90,000 to $900,000.

Let’s say that a company is racist or sexist. It then posts a range of $70,000 to $100,000 for a position which most people would consider reasonable. What would stop them from paying the black guy or a woman $70,000 and the white guy $100,000? The company could easily then justify the difference based on the applicants’ resume differences and be perfectly within the letter of the law. The employer would be in compliance under the Equal Pay Act, Title VII of the Civil Rights Act, and the California Equal Pay Act, and the California Fair Employment and Housing Act (FEHA).

Does anybody ever think their way through these mandates? It seems that lack of experience in anything other than being in government traps them in their own inadequacies.

Worse yet, California instituted a new reporting requirement in the same law. Each year on or before the second Wednesday of May, any private employer with 100 or more employees must submit an annual pay data report to the California Civil Rights Department that discloses the median and mean hourly rates, within each listed job category, by race, ethnicity, and gender. Furthermore, any private employer with 100 or more workers hired through labor contractors (such as temporary staffing agencies) must submit a separate pay data report for these workers. Failure to file the required reports could result in penalties of $100 per employee for an initial violation and up to $200 per employee for any subsequent violation.
The first thought that came to mind is I would like to test the legislators who voted for this law as to whether they understand the difference between median and mean. My bet in the fast majority would be helpless to explain that.

Since employers are prohibited from asking about employees’ race, age, disability, religion or gender identity, how are they supposed to complete this report? Since there are anywhere from the two commonly accepted genders to somewhere in the stratosphere (in some people’s minds including the people who voted for this law) how does one properly complete this form? Especially without asking anyone about their gender? The question then becomes how many federal and state laws will be broken by completing this report. And how do they report on someone’s ethnicity? Since we are a nation of mutts with people having muddled heritage, how does one comply with that requirement?

Does anybody ever think their way through these mandates?

We do know who the real winners will be here – lawyers. You can just contemplate all the lawsuits being ginned up from the ads and the reports. Instead of having to take discovery and guessing pay discrimination, they will just look at the job advertisements in real time and pick ones they do not like. Then they will send dummy applications for potential plaintiffs/class actions and use the mandated pay rates in the job description to fire off a lawsuit if there is ANY deviation in pay from one candidate to the next.

Existing employees will start following the ads and then they will demand higher wages as there will be perceived pay grievances. That will also cause more lawsuits.

And then there are the fines. Governments always have their fines.
Add to that the time and money dealing with these distractions instead of the business focusing on making greater profits so they can pay higher wages which is the supposed purpose of this legislation.

A person smarter than I am once observed if women were working for less money than men and doing the same quality work, why would any thoughtful capitalist ever hire a man? They would hire the women and put the extra dinero in their own pocket. Just a thought.