No, according to this recent court case — as long as companies document their reasons for pay differences.

An African-American employee learned that she was making less than other, white employees in the same position. She sued, claiming she was given a lower salary because of her race.

The company’s explanation: Higher salaries are often offered to employees who come from other employers to convince them to leave their current jobs. In this case, the two white employees in question were hired from outside and negotiated for higher pay during the offer process. Also, both had received other offers while employed with the company and negotiated for raises at that time.

On the other hand, the African-American employee was promoted to the position, did not negotiate her salary and never told the company about other job offers.

The court ruled in favor of the employer. Since HR had documented the salary negotiation process, the judge agreed there was no discrimination — just the natural effects of a free market.

Cite: Sims v. Burlington Coat Factory Warehouse of Alabama, Inc.

A large chunk of workers would accept a lower salary in exchange for the opportunity to work from home, according to a recent survey by Citrix Online. About 21% of respondents said they’d take a 5% pay cut if they could telecommute one or two days a week.

In these days of limited staffing budgets, that could give employers some option for cutting wages. It could also be a way to attract talent when you have little room for salary negotiations.

Some other findings from the survey:

• 75% of employees want the freedom to work remotely.
• 56% have never been able to telecommute.
• Managers’ most common arguments against telecommuting include: Job duties demand office attendance (cited by 38% of managers), remote work hurts relationship-building (19%) and productivity will decline if employees work from home (15%).

When done properly, performance reviews will motive employees to do their jobs better and give them a concrete idea of how to do that. But too many managers fail to give the process the attention it deserves.

The majority of employees (57%) say they’ve never had a useful performance review, according to a survey by Harris Interactive. Those employees report their performance reviews have done little to motivate them or help them improve their work.

So what’s wrong? Here are the three most common mistakes managers make that limit the value of employee assessments:

1. Missing a key motivator

What do employees want out of their reviews? Aside from a raise, the main thing employees want to know is what career path they’re on, says consultant Laura Ford, speaking at the Society for Human Resources Management Annual Conference in New Orleans.

But one thing many reviews are missing is a discussion of what advancement opportunities may be available in the near future, and what the employee needs to do to make it happen.

2. Not going the distance

Too often, reviews for well-performing employees congratulate them on what they’ve accomplished and let the story end there. For example:

An employee meets a predetermined goal of boosting production by 10%. Her manager writes in her review: “Your production was lifted by 10% and you’ve met your goal.”

While that’s true, wording it that way makes it sound like she’s reached the end of the line. Instead, the manager should say: “You lifted production by 10%, which is a great accomplishment. You should continue the progress and try to reach 15% — or even higher — next year.”

That congratulates the employee on a job well done, while reinforcing the fact that there’s always room to move forward.

3. Failing to properly separate performance and pay discussions

Reviews are generally intertwined with a talk about salary. But raises should always be the last thing the manager talks about.

If pay comes up before the review is fully completed, it’s more likely employees will start arguing about the assessment instead of taking responsibility for their work. When the review is completed first, employees are more receptive to the manager’s critique.

Under the Paid Vacation Act, introduced to the House of Representatives on May 21, companies with at least 100 employees would have to give all (full- and part-time) workers a paid week off each year after they’re employed for 12 months.

Three years after the law’s passed, the requirements would get tougher — previously covered employers would need to offer two paid weeks of vacation, and companies with at least 50 employees would need to offer one week.

The idea for the bill came to Rep. Alan Grayson (D-Fla.) while he was visiting Disney World, Politico reports. He says mandatory vacations will make employees happier and more productive, cut down on illnesses and stimulate the economy (especially in Grayson’s district, which includes Orlando).

The Paid Vacation Act was introduced just days after the Healthy Families Act (HFA), which would make paid sick leave mandatory.

What are the odds it’ll pass?

The bill has two co-sponsors (compared to the HFA’s 101), and many opponents have argued that now is not the right time to be adding this kind of burden to companies.

However, the bill’s supporters point out that 25% of American employees get no vacation time, and that 147 other countries have paid vacation laws.

We’ll keep you posted.

After failing to move forward last year, the Fair Pay Act (not be confused with the already-passed Lilly Ledbetter Fair Pay Act) has been reintroduced into both the House and the Senate.

Pay bias is already illegal, so what’s new about the bill? Language is changed to make it easier for employees to sue.

Under the FPA, it would be unlawful to use sex, race, religion, national origin or disability as a reason to pay an employee less than someone else who performs “equivalent” work. “Equivalent” jobs are defined as “jobs that may be dissimilar, but whose requirements are equivalent, when viewed as a composite of skills, effort, responsibility, and working conditions.” The goal is to keep pay for jobs dominated by women and minorities at the same level as  comparable jobs dominated by men.

The bill also eliminates some of the defenses employers can currently use. Under the current Equal Pay Act, companies stay off the hook if they prove a pay disparity was based on “any factor other than sex.” Under the FPA, though, the factor must also be “job-related with respect to the position in question” and “further a legitimate business purpose.”

For example, companies would still be OK when pay is based on seniority, merit or a measure of the quality or quantity of work. But right now, employers have also had success arguing that some employees are paid more than others because they negotiated for a higher salary or earned more in their previous jobs.

But under the FPA, those reasons likely wouldn’t be considered job-related.

Here are a few of the best no- or low-cost motivators, according to the PBP Executive Report Motivating Without Money: 91 Inexpensive Ways to Keep Employees Happy:

1. Put them in pictures – Using photos of employees for advertising materials, Web sites and other company publications is a great way to show appreciation by making workers the face of the organization.
2. Give shiny cars – Many people are putting off new car purchases for a while, but your company can help them get a car that looks new. You can buy an express car wash for about $5; so for $100 you can give 20 employees a clean car.
3. Write a note – Even when you can’t add money to employees’ paychecks, managers can use them to add motivation. Every now and then, managers can add a handwritten note to someone’s pay stub, offering thanks for doing something positive.
4. Let them brag – Put a large bulletin board in a public place where employees can post certificates, newspaper clippings and other items about themselves or loved ones.
5. Thank the whole family – When an employee puts in extra effort, a manager can send a care package to his or her home, containing things the family can do together.

What are some of the low-cost motivators your company is using these days? Share your experiences in the comments section below.

On average, employers will pay interns an hourly wage of $17.13 — 5% higher than last year — according to a recent survey by the National Association of Colleges and Employers. Interestingly, however, the survey also reported employers will be offering about 21% fewer internships this year than in 2008.

Here’s the average hourly pay broken down by the intern’s field of study:

• Business — $15.93
• Communications — $16.00
• Sciences — $16.60
• Computer Sciences — $17.20
• Engineering — $18.26

Of course, those are national numbers. When benchmarking your own intern compensation, you’ll need to take a look at regional data, too.

In one recent case, an employee was fired for violating a policy on keeping salaries confidential.

The company provided temporary staffing services to clients. An employee had a complaint about his paycheck, and he took the issue up with the client he was working for at the time.

He was fired. A policy in the company’s handbook read: “The terms of this employment, including compensation, are confidential … Disclosure of these terms to other parties may constitute grounds for dismissal.”

The employee took the company to court, claiming the policy violated the National Labor Relations Act (NLRA), which gives employees the right to freely discuss their working conditions with each other or representatives from a union.

The employer argued that the intention was simply to keep the info away from people outside the company. But the court didn’t buy it. The policy was written too broadly — a reasonable employee could interpret it to ban discussions with co-workers and union representatives.

The company was forced to eliminate the policy, reinstate the employee and give him back pay.

Cite: Northeastern Land Services, Ltd. v. N.L.R.B.

A company hires two candidates for similar positions, one male and one female. The male candidate bargains to get a higher salary, while the woman accepts the original offer. The pay difference is legal, right? Not necessarily, according to a recent court ruling.

Companies are allowed to offer male and female employees different rates of pay as long as it’s due to a “reasonable factor other than sex,” according to the EEOC — such as prior experience, education and bargaining skills.

But the key: making sure salary negotiations are handled consistently. Many companies have been hit with lawsuits because of managers who were willing to bargain with one group of candidates and not another.

In one recent case, two women sued their employer because they were paid less than a male employee in the same position.

The company claimed the male employee received a higher salary because he negotiated for it. After he was hired, he told his manager he was offered two jobs at other companies and used those offers to bargain for a raise.

But the women won their case. Why?

They both tried the same strategy to negotiate for higher pay. The manager’s response: “We don’t play that game.”

Therefore, the court ruled, the company violated the Equal Pay Act by treating men and women differently when it came to salary negotiations. The company eventually settled the case for $180,000 (Cite: EEOC v. EGS Electrical Group, LLC).

Keep managers consistent

As this case shows, it’s up to HR to make sure all managers stick to consistent salary negotiation procedures.

Some more guidelines from the EEOC:

• Education, experience or training may justify a difference in pay — but only when they’re directly related to the job.
• Though some courts disagree, the EEOC states that prior salaries alone can’t justify a wage difference, because a woman may have been paid less in past jobs because of gender bias.
• Of course, the same rule of consistency applies to merit-based raises and other pay increases.

Fewer companies will be hiring in the coming months, because of the economic downturn. More than 60% of organizations say they’re either very likely or somewhat likely to freeze hiring soon, according to a survey by Towers Perrin conducted at the end of October.

Layoff plans are less common but still looming — 48% of companies are likely to implement a targeted headcount reduction (for example, focusing on low performers and those in the least critical roles).

On the other hand, only 8% are very likely to reduce their workforce by 10% or more, with another 8% somewhat likely.