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Past Education and Experience May Justify Different Pay Rates for New Hires, but Not Later Pay Rates for Employees

Sherman & Howard (05/01/2012) Ted Olsen

The U.S. Court of Appeals for the Seventh Circuit recently ruled that different starting pay rates can be justified by differences in education and work experience among employees, but these differences do not justify different pay raises or different intervals between raises. The court assumed that pay increases are based solely on performance, but employment experts point out that the law does not require that employers consider only the employee’s performance immediately before the raise. Experts also point out that equal, across-the-board pay increases will not close any time-of-hire pay gaps.