Workplace fairness laws are making work less fair

A few years ago, Song Ma, a professor of finance and entrepreneurship at Yale, found himself torn between two competing ideas about the state of the workplace.

The first was that the #MeToo movement had generated a powerful wave of reforms to protect victims of abuse. Starting in 2018, states including California, New York, and Washington had passed laws to weaken non-disclosure agreements, which had long been used to silence victims of harassment at work. In 2022, Congress passed the Speak Out Act, which prevents employers from being able to demand workers to sign NDAs preemptively, before an incident or dispute occurs.

"These were reforms nearly everyone cheered for," says Ma. "And for good reason."

His other idea was that these laws may have backfired, and made it worse for women.

"As economists, we've learned that well-intentioned labor regulations don't always produce the outcomes we hope for," he says. After the Americans with Disabilities Act came into effect in 1990, he notes, employment among disabled workers declined as some employers avoided hiring them to sidestep compliance costs. Similarly, so-called Ban the Box laws, designed to help people with criminal records get hired, ended up hurting young Black men, because employers fell back on what Ma calls "cruder demographic proxies." Because of harmful racial and gender stereotypes, Ma explains, hiring managers drew the conclusion that a Black man applying for a job was more likely to have a criminal conviction than a different applicant.

So to test whether a similar dynamic was playing out with NDA bans, Ma decided to look at startups. For one, "They're crucial for innovation and job creation, yet often lack formal HR infrastructure," he says. He also knew that harassment had been well-documented in the startup world.

Earlier this year, Ma and his collaborators published a paper with his findings: NDA bans weren't always living up to their advocates' expectations. Startups based in states that had implemented NDA-weakening laws hired about 8% fewer women per year than startups in states that hadn't passed those laws.

"That's meaningful when you consider the average startup in our sample hires just over one woman per year," he says. "And the effect appeared immediately, persisted for years, and concentrated exactly where you'd expect if firms were minimizing perceived legal risk: among junior women and in small, male-dominated startups with weaker internal safeguards."

Put bluntly, companies were once again sidestepping potential repercussions of regulation by simply not hiring people who were most likely to benefit from the new protections.

NDA bans also aren't the only recent employment laws designed to create more equitable workplaces that have fallen short and — in the worst cases — even backfired. Another is mandating employers to post salary ranges.

In 2021, The Equal Pay for Equal Work Act went into effect in Colorado. New York and California both passed related laws the following year. States including Maryland, Massachusetts, Connecticut, Nevada, and Rhode Island have adopted similar measures aimed at making pay negotiations less opaque.

These were hailed as promising steps toward a more equitable workplace, largely because, as research shows, a lack of pay transparency has long underpinned pay gaps in both gender and race. In many workplaces, employees have historically been discouraged from discussing salaries, allowing unequal pay for similar roles to go unnoticed for years, or even decades. Women who work full-time in the US earn around 83% of what men do, a figure that's hardly changed in recent decades. For Black and Latina women, the gap is considerably wider at about 66% and 58% respectively.

Yet here too, transparency alone has proven to be an imperfect solution to a complex and entrenched problem.

One issue is that salary range laws currently offer little guidance on how wide or narrow the ranges should be. And that detail, research suggests, can significantly shape how candidates respond to job postings.

Alice Lee, an assistant professor of organizational behavior at Cornell, is part of a team that analyzed almost 10 million US job postings. They found that the average salary range posted spanned about $38,000. But variation was enormous: some listings covered $20,000, while others stretched well past $100,000.

This discovery got Lee thinking about whether the width of a posted range might affect who decides to apply and how they subsequently negotiate, especially "given that women, on average, tend to be more averse to financial uncertainty," she says. When Lee and her colleagues subsequently studied this, her suspicions were corroborated: Women indeed show a stronger preference than men for jobs with narrower salary ranges.

"Wider posted ranges were associated with lower representation of women in the workforce, even after accounting for firm size and other factors," she explains. "That suggested this isn't just a pattern that shows up in controlled settings but one that may be shaping real labor market outcomes." So yes, she concluded, the current approach to transparency may be perpetuating the very pay gaps the laws were designed to close.

When I interviewed half a dozen women in the white-collar workforce — all of whom requested anonymity for fear it might disadvantage them in future salary negotiations — all of them said they weren't surprised by these results, either.

"If a company posts a huge salary range, it makes me feel like they're ticking a box rather than actually complying with a law," said one 39-year old woman who works in healthcare in New York City. "It makes me wonder what other rules and laws that company is trying to bypass."

Research does show that pay range transparency can help close wage gaps — if the range is not too big, for example, and if pay offers fall within the advertised range. But the complications don't stop at hiring. Even in fully transparent environments, unintended consequences can emerge. Research published last year by the University of California, Riverside, for example, found that when workers learn how their pay compares to their peers, their sense of entitlement can shift sharply depending on where they rank. Those near the top reported increased confidence, while lower-ranked employees often felt demoralized — and were less likely to ask for raises. This dynamic can also affect performance. Lower-ranked workers, the research shows, may feel less motivated to improve or collaborate after learning they earn less than their peers.

Studies have also found that greater pay transparency can reduce workers' bargaining power and, in some cases, push down average wages.

If employment laws designed to bolster equity are at times exacerbating inequality, what is to be done?

Workplace and leadership consultant Ruchika T. Malhotra says that one big problem is that managers are still failing to understand that making organizations fair and equitable benefits everyone.

Despite a growing body of research demonstrating that more inclusive workplaces translate into happier employees, better staff retention, and a healthier bottom line, "many organizations still operate with a zero-sum mindset — this idea that if one group benefits, another loses out," says Malhotra. "There's this incorrect belief, for example, that increasing equity somehow disadvantages men, even though there's so much data showing otherwise." In 2024, for example, the World Bank predicted that closing global gender gaps in work and pay could increase global GDP by more than a fifth.

Because of how deep-rooted this belief is, it's unlikely that legislation alone will lead to a mindset shift, she says. Instead managers need to experience firsthand the benefits of fairer workplaces and understand that the laws are not designed to punish them but to help them. "We need a real, internal commitment to want to fix issues of unfairness and inequality," says Malhotra.

Song Ma of Yale says that regulation has to be paired with "institutional" support in order to be effective. His research shows that after NDA bans were passed, female hiring particularly decreased in startups that didn't have a fleshed-out HR department. In larger firms in which those resources are more established, though, there was no reduction in female hiring.

"The lesson isn't 'don't ban NDAs,'" says Ma. "It's that legal reforms work best when firms have the infrastructure to absorb them."

In fact, his research also revealed some encouraging effects from new NDA legislation. Although it led to fewer women getting hired, it also led to an increase in the number of women reaching managerial positions. "Following NDA reforms, startups experience higher male-manager turnover," Ma and his colleagues wrote in the paper. This was perhaps, the researchers speculated, due to firms filling vacancies left by male managers, who — because of the NDA laws — were more likely to leave.

As for pay transparency laws, Alice Lee of Cornell says that salary ranges alone aren't enough. If she had a "magic wand," she says, she would "require employers to supplement posted salary ranges with clear contextual information about compensation." In her research she tested this approach by providing job applicants with their desired role's typical starting salary and how that particular employer tends to determine what to offer. In cases in which that information was provided, she explains, "the gender gap in application preferences effectively disappeared."

What would also help, Lee says, would be stricter rules on the ranges. In 2025 New Jersey proposed a law, for example, that caps the width of posted ranges at 60% of the minimum salary.

Employers, she adds, should also consider whether one single wide range genuinely reflects one role at one level, or whether that range is really bundling together different positions that would be better served by separate, more precise postings.

Lee is cautiously optimistic. "These laws represent genuine progress," she says. "But the evidence suggests that the next generation of these policies should focus not just on whether employers disclose a range, but on whether that disclosure is actually useful to the people it's intended to serve."

In other words, while many laws represent a step towards a fairer workplace, ticking a box is never going to lead to lasting change. External regulation will almost always fall short without internal intention.

Josie Cox is a journalist who has worked for publications like Reuters, The Independent, and The Wall Street Journal. She is the author of the book, "Women Money Power: The Rise and Fall of Economic Equality."