In case you’re wondering what the two no shame posts (click here and here) have to do with employment law, I thought I’d do one more post to give you my take on it.

Compensation paid to corporate big wigs always becomes a sticking point when a union contract is up for renegotiation.  “You’re offering us a nickle more per hour when this proxy shows the CEO was paid $20 million last year.”

Big time compensation makes terminated employees think big time money when they sue their former employers.  “If you can pay the CEO what he makes, you can pay me the pittance I’m asking to settle my case.”

Big time compensation also increases the likelihood of litigation when the powers that be announce that a reduction-in-force is necessary for the sake of the company’s remaining competitive or perhaps for the sake of the company’s survival.  “If you cut all the big shots’ pay by 10%, wouldn’t that have the same effect and allow people to keep their jobs?”

Executive compensation is a battle cry when a union is attempting to organize your employees.  “Do you really think your employer gives a flip about you when you’re being paid $15 an hour and the CEO is making millions?” 

If the union is successful, it’ll become another battle cry if the employees go on strike.  “Does your CEO, Mr. Millionaire, know your name like he knows the name of his stock broker?”

Such whopping compensation causes the disconnect between the C-Suite and other employees to become wider and wider, not just between the top dogs and employees at the bottom of the organization but between the top dogs and all other employees.  A lot of employees up and down the line equate the kind of disparity in pay they see as a sign of disrespect.  It doesn’t motivate them to be more productive, and it doesn’t make them feel part of the team. 

Over time, a dysfunctional culture is likely to result, and that will produce all kinds of internal problems and disputes.  Some of these problems and disputes lead to litigation, but even if they don’t, you have a workplace that’s operating way below the level it should be operating.  Sooner or later, this condition morphs into significant legal problems.