How to get a fair salary in a family owned business
(MoneyWatch) Did you know that more than half of the American workforce works for a "small" business?
(Small business, here, is defined as one with under 500 employees.) I get many emails from workers at small businesses, and it is predominantly those who work for family owned businesses that seem to run into the most trouble. For instance, this woman wrote me last week:
"I work for a small company (less than 50) employees, who has a total of 5 directors (three women and two men), one of which was hired in 2010. Two women and one man are family members. The other woman (me) and other man are not. When the non-family member male director was hired in 2010 he was given a 40% pay raise to match almost what the other male director was making. I was hired in 2006, and my last pay raise was in 2008. I received a large bonus in 2010 (before this director was hired), but nothing since. In fact, I was forced to take a small pay cut in 2011 because the company was struggling. The man who previously held my job got reviews and raises every year. I get nothing. Every other year I have been told "you're doing a great job, you don't need a review." I'm leaving anyway, but I figured I would ask - no one seems to know which yardstick to use, all the directors as a pool, or only those directors who are not also owners."
See the problem this small, family owned business has created? A group of family members that are paid more than everyone else is par for the course in many family owned businesses. It may be stupid. It may be for tax purposes (if Dad owns the business, it may be a way to give his children their "inheritance" through large paychecks). All of it is legal. There are no (to my knowledge) laws against paying people more based on their birth certificates.
Where this business runs into problems is when it chooses to treat the one male non-family member director substantially differently than the one female non-family member director. Now there are plenty of legal reasons to have disparate salaries--for instance, if he simply asked and she didn't, or he has technical skills that she doesn't, or if the market changed substantially between hirings. However, none of that looks good.
My letter writer asks which yardstick she should use to consider raises--all directors or only her male counterpart. The answer is neither. It should be based on market rates for similar jobs in similar companies. The lines get blurred when salaries are inflated based on genetics. But, if this company chooses to have poor pay practices, it opens them up to lawsuits and investigations by the Department of Labor. And, honestly, when you have two non-family members in substantially similar jobs at substantially similar levels and they are paid substantially different salaries, the burden will fall on the business owners to explain why the woman is paid substantially less than the man.
What do you do if you're in this situation? Well, the letter writer is already leaving, which is often the best and fastest solution to bad business practices. But, if you want to stay, you do need to approach the situation with caution.
The first step is gathering as much outside data as possible regarding your salary. Why outside? Because that is truly what your salary should be based on -- the market.
The second step is to present that to your boss and ask for a raise. If that is successful, then you win. If not, move to step three.
Step three -- present internal salary information. "My salary is $65,450 per year. Bill's is $82,000 per year. We do very similar jobs and, in fact, I have more responsibility than he does. I believe that our salaries should be similar." If that is not successful, it's time to make a decision.
Option A. Acknowledge to yourself that company management is stupid, illegal and horrible, but that it is worth it to you to continue working here, shut your mouth and go back to work. Some people may be horrified that I present this as an option, but in the real world, sometimes the devil you know is better than the devil you don't. Sometimes location, flexibility, or your lack of skills means this may be the best job you can get. Further action can be costly-- both financially and emotionally.
Option B. Contact a lawyer (www.Nela.org can refer you to an employment attorney in your state), or the Department of Labor for an initial consultation. If they agree that things seem fishy, write up all of your documentation and send it via email (copy your home, non-company email address) to the president of the company (in a small business) or to HR (if applicable) or to whomever is listed in the company's official handbook (many small businesses don't have them) as the contact person, and make sure the subject line says, "Formal Complaint of Gender Discrimination." The text of the email should compile all the evidence that you've gathered. It's not absolutely necessary to contact a lawyer before proceeding to this step, but if you can afford a consultation, it can be extremely helpful.
If you take option B, be prepared for the fallout. It is not going to be an easy process. The people who once considered you a great asset to their team (after all, you were willing to work for peanuts!) will now despise you. It can be painful and awful -- sometimes worth it, sometimes not. But, if you want to make a formal complaint, you need to do so before leaving.
The reality is, often in small businesses, decisions are made by people without experience in employment law. Employment law is complex and mistakes are easily made. The end result of that could be that some employees are being illegally discriminated against. Sometimes they think they can get away with it because they are so small. And it's true that micro-businesses (under 15 people) often don't have to follow the same rules, but when you're pushing 50 employees, you're definitely subject to discrimination laws.
Have a workplace dilemma? Send your questions to EvilHRLady@gmail.com.
