Discrimination in hiring for wages?

HCA

Is it discrimination (and is so, is it allowed) to consider what a candidate would be paid during hiring? For example, we give credit for prior service with our company; so if someone with 10 years of prior work experience (with us) applies for a coffee-pouring-type job, we would have to pay $10/hr instead of $6/hr for someone new off the street (even though neither has any experience in "pouring coffee").

Can we consider that when we make our selection? It's obviously done at a professional level every day (i.e., do we hire the new doctor for $95,000 or the experienced doctore for $250,000), but I wanted to be sure it's okay at lower levels too.

Down_the_Middle

Prior, job related experience is certainly permissable in determining a start rate for a new hire. The issue of discrimination arises when the employer chooses to pay 1 person more than another and the criteria to do so is based on a protected category (e.g. age, sex, etc.) I'm not certain how you justify paying someone $4.00 more per hour for prior coffee pouring experience, but that wasn't the question.............

HCA

But what about not hiring someone b/c you would have to pay them $10/hr, and instead choosing the person who you only have to pay $6/hr (assuming based on all other factors that the 1st person ($10) would have been the hiring committee's first pick)?

Dutch2

Not sure that I follow this 100% but I will give it a shot...
When we transfer someone internally to a new position, we ensure the ee is aware of the job grade and salary range of the vacant position. Depending on what the ee was making in their previous position this could be an increase or decrease in pay. Bottom line it is our responsibility to put the best qualified person we can in the vacant position either from within the ranks or a new hire.
Good luck...

HCA

What if your company gave credit on your pay scale for years with your company and you have two current employees who want the same job - both are equally qualified. But you would have to pay one $7 hr (b/c of his years with the co), and the other $15/hr (b/c of his years with the co). Do you think you can pick the first one ($7/hr) just b/c it will save you money?

Down_the_Middle

If all other issues are essentially the same w/the 2 candidates, the answer is YES. Why would you pay anyone more money for a job than you feel is necessary???? There's no federal law that requires an employer to pay more dollars to someone becuz of their experience. (A CBA might require something else, but you didn't mention it, so I'll ignore it.) While most employers choose to do this, it's a choice vs any kind of mandate.
I'm asuming that the value of this new position is within the same pay range as both candidates, so choosing the $7/hr person is a good business decision assuming both candidates meet the prerequisites.

HRCalico

Completely off the top and with no other details involved, two things could possibly throw a wrench in the works:

1) the $10/hour coffee pourer could be making more because they are older and could be in a protected age class,

2) the $6/hour coffee pourer could be a female who was discriminated against based on gender in past jobs.

I recently read something about not paying people based on what they were previously making because of #2, that perhaps they weren't fairly paid in the past. It's completely a stretch, and the others have made some fine points. This is just my 1 cent worth.

Whirlwind

Working in public K-12 education, I understand about payscales that are almost totally experience-driven. That is the case for our teachers and, by law, we're stuck with it. So we might be looking at two candidates for a teacher vacancy who are similarly qualified except for the amount of teaching experience which might yield a $15K salary differential. Now, some would say that the more experienced teacher will be the better teacher, but sometimes the more experienced one is burned out and/or on cruise-control until retirement while the young one is fresh and motivated. Ultimately, we pick the one whose particular type (not length) of experience and training best matches up with the kids at our very specialized school. I've heard that some districts will chose the "cheaper" teacher among similarly qualified applicants. The problem I see there is potential age discrimination. A disparate impact analysis would surely reveal that going for the applicants who will be paid lower in an experience = more pay system will work against older applicants.

WT

The real question here is what do you want to do? The credit given for service may well be a detriment to lateral movement for employees. On the other hand, it could be a key factor in employee loyalty. This speaks to why the policy was put in place. Also are you talking temporary issues? By that, I mean the range of the job in question. Will the new hire get up to the top wage in a couple of years and match what the company person would get right away? If so, you only bought a couple of years of savings by putting the new person in the job. Try to go from the specific case you are struggling with to the general case. What are the goals of the policy in place and is the policy meeting those goals? Do you need to change the policy to better meet the goals or is it just a "feel good" sort of policy put in place with no thought for effects on morale or profit? Bottom line - if the overall policy is good at meeting goals but pinches you in some isolated cases, take the good with the bad, but if the policy is poorly thought out and leads to trouble, then change it.

HCA

Lots of great ideas to think about. Thanks everybody. Basically, our leaders want the policy b/c we want to encourage retention and reward the people who are willing to stick it out with us over the years. When an employee starts out, we aren't always very competetive wage wise. But if they hang tough, they can end up earning a competitive wage.

But I know there will be departments within the organization who will completely lose it when they are told they may have to pay someone $20/hr just because they have worked in another department for the past 20 years. We'll have to be careful to avoid the discrimination appearance, but I think as long as we have a sound policy in place....


I am concerned about the situation where a supervisor doesn't pick the 20 year veteran employee for the new job because he doesn't want to pay him $20/hr to mow lawns, but I guess we'll cross that bridge when we get there. That was my basic underling concern: Can you discriminate and not pick someone for a job just because you would have to pay him more than an outsider or (as the teacher above put it) more than an unexperienced, young, newbie.

Dutch2

Do you have salary ranges for each of your positions? These could help your compamy with the higher costs for someone to pour coffee or mow the lawn. If a position max's out at $x per hour, this will help in eliminating some internal transfers if they are already making more than the max for a position.
Good luck...

pork1

One way to have your cake and eat it too, is to use a "Bi-annual lump sum payment for the years of service factor" and pay the weekly rate at the level that your company deems appropriate.

Many a company pays a lump sum increase to senior employees and pays it out over a given period of time.

PORK

Gillian3

Legal discrimination is based on race, sex etc, etc., so decisions based upon pay usually won't be discriminatory unless someone can show that the decisions are negatively impacting a particular group but not others. It is also not discriminatory to offer a competitive wage to someone who wants to transfer, even if the competitive wage is much lower than the person is currently making - that is why it is a bit unusual for a person to want to transfer to a lower paying job. If fairness is what your management is after, you just need to put together a simple pay program, based on your labor market, with pay grades, minimums and maximums.