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June 24, 2011
Compensation Administration and Legal issues

In a BLR webinar entitled "Compensation Communications 101: How to Talk With Your Employees About Their Pay," Mary Anne Kennedy, principal consultant at New Jersey-based MAK HR Consulting, discussed the issue of implied contracts with employees.

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You've given most (if not all) of your employees an indication in writing of what they should earn in pay and benefits -- whether it's an offer letter, a written employment contract, or other documents.

But, as you start talking more openly about pay, make sure you (and your supervisors) don't cross the line into making promises that could be construed as implied contracts with your workers. For example, if you've suffered through a layoff recently, and you tell the remaining workers in a meeting that you're "sure" they'll get raises this year, you may face claims down the road from upset workers if you find you're unable to fulfill that pledge.

Refrain from making any commitments of this type -- especially in group settings! -- when you discuss pay in the workplace.

As you progress toward a more open workplace for discussing pay issues, you may find a nasty surprise as you examine your organization's pay philosophies and grades: pay inequities and disparities that cross the line into discriminatory territory!

With the recent passage of the Lilly Ledbetter Fair Pay Act, your liability as an employer in pay discrimination cases grew considerably. This act reset the statute of limitations for claiming discrimination -- it's now the date of the employee's last paycheck!

If you uncover potentially discriminatory pay issues as you work on your compensation communication plan, consult your employment counsel immediately to determine the best ways to resolve them lawfully.

Mary Anne Kennedy is the principal consultant at MAK HR Consulting, LLC (www.makhr.com), a New Jersey-based full-service human resources advisory firm. Her firm provides small to medium sized business owners and employers with the full spectrum of HR services and programs, including all aspects of talent acquisition (from the full-cycle recruitment process to succession planning and performance management).

Need help staying on top of critical HR and Compensation issues? See all the webinars BLR has to offer.

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