The problems are that it's subjective, so will lead to arguing all the time. And the truth is often closer to, Sandy negotiated a higher salary when she came in,maybe because she made more at her previous job.

But the biggest problem is that if you wanted this "fixed", you can only raise salaries of people who make too little. Lowering salaries of people who make too much is usually a legal impossibility.

So the effect will be that you risk ending up overpaying everybody instead of only an outlier now and then.

> And the truth is often closer to, Sandy negotiated a higher salary when she came in,maybe because she made more at her previous job.

Perhaps that's what these laws are attempting to address ;)

It doesn’t lead to “arguing all the time” it leads to “employees are able to negotiate more easily with better information”. If you pay so unfairly that pay transparency leads to your business imploding maybe that should be cause for thought.

> Lowering salaries of people who make too much is usually a legal impossibility.

What law is this? I have never heard of it in any US jurisdiction.

Salary changes come with a new contract IME (unless the changes are in the bonus compensation). You can't force someone to sign a new contract (you can probably make them a sign or leave offer, but you can't make them sign) so you can't lower someone's base salary.

There is no need to have a contract. Many small businesses just hire people and give them a piece of paper saying what they will get or orally tell them how much they will get.

In the event there is a contract, unless the contract specifies compensation for terminating employment, the employer can always just terminate the employee for the reason of “this employee is no longer worth $x per hour/year to us”. Barring any other union agreements of course.

Can't you just fire an employee for whatever reason? Any change in contract is then equivalent to fire and hire.

Yeah OK, I hadn't considered that. Where I live (in the Netherlands) that would never fly.