Fair Pay Act

What You Need To Know about the Fair Pay Act

Just last Saturday, we had dinner at a BJ Brewery location. It’s a family-style restaurant where I usually tip 15 percent. I had had a bad day and was less gracious than I should have been over a couple of mistakes the waitress made. She, on the other hand, was more than gracious in response. I left a 20% tip – she had earned it.

Imagine that on the way out of the restaurant the waiter who had served us two weeks ago confronted me. “You gave her a 20 percent tip but only gave me a 15 percent tip two weeks ago. You owe me an additional 5 percent tip“.

I would be outraged by his brazenness leaving me no alternative. Never tip.

Pay Check Privacy under Attack

If the Fair Pay Act before the US Senate Commerce Committee were to become law, confrontations just like my imaginary tale could become a daily staple of the American work place. The Senate bill would make it illegal for an employee to refuse to disclose their salary/hourly wage to any other employee who asks for the information.

Further, there’s no specific language to insure the employee who is asking has a reasonable basis to believe that they are being treated unfairly. Failure to comply could lead to legal consequences for both the confronted employee and the employer.

The confronter can sue if the confronted claims privacy. The confronter can sue if the confronted acknowledges that he/she earns more money.

Sounds like a full employment act for under-employed lawyers.

It Is Fair to Pay For Performance

In business the issue of fair pay, within the context of equal pay, is a constant challenge. It’s a balancing act – between rewarding key performers and still motivating the larger work force.

We call it pay for performance and no matter how many objective criteria are established, it’s a gut call. Making a gut call depends on the reviewer’s skill plus the assurance of privacy needed to be open, honest and constructive with the employee.

Last Saturday, I just calculated the waitress’s tip and left it. It’s much harder to sit across the desk from someone you work with regularly and explain they are not going to get the raise they expected or they are going to get a promotion they didn’t expect but deserve more than a colleague – and why that is so.

Imagine Public Performance Reviews

Can you imagine conducting that review in an auditorium full of the employee’s peers? Neither can I – but that is the net effect the Fair Pay Act would have.

Performance reviews would take on the characteristics of a trial. The reviewer would become the defendant, the employee the prosecutor, the co-workers the jury judging the fairness of the argument and outcome.

The appeals process would be endless. The money in the merit pay pool would be diverted to pay for an army of lawyers.

Employers Left With Bad Choices

Employers would be left with two bad alternatives – eliminate all incentive pay and performance reward systems or relocate jobs outside the United States.

Eliminating incentive pay and performance rewards creates disincentives for employees. There is peer pressure to resist innovation, creativity, increased productivity and demonstrated ingenuity. That was the pay philosophy at General Motors – prior to the 2009 bankruptcy.

The easiest jobs to relocate are the best jobs – for example, technology, banking, pharmaceutical research, and advanced manufacturing. The jobs we need to build a sustainable 21st American Century.

What If Congress Gave the Economy a Kick in the Pants, Instead?

The best way to insure fair pay is to expand the economy.

The government has a legitimate leadership interest in building and maintaining the national physical infrastructure. These activities – properly funded – will generate engineering, construction jobs and support jobs to boost the economy this year and into the future.

We know exactly where these jobs are. Our national transportation system isn’t globally competitive. Our national utility grid is unacceptably fragile. Our major seaports must be modernized to compete globally to dock 21st century super-cargo and super-tanker ships.

But where will the money come from?

WHAT IF the Senate chartered an independent, private sector US Infrastructure Bank to fund modernization of our public infrastructure?

When the economy generates more jobs than qualified applicants to fill them, pay for performance is not just fair but required to compete for workers! Isn’t that the real objective after all?

Photo Credit: Howie Levine/RAC

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