New research has uncovered surprising outcomes from workplace protection laws that were intended to create fairer employment conditions for women. Studies examining non-disclosure agreement restrictions and salary transparency requirements suggest these measures may sometimes produce effects opposite to their intended goals.
Song Ma, a professor of finance and entrepreneurship at Yale, recently investigated the impact of laws weakening non-disclosure agreements that had traditionally prevented harassment victims from speaking out. Beginning in 2018, states including California, New York, and Washington enacted legislation limiting NDAs. In 2022, federal lawmakers passed the Speak Out Act, preventing employers from requiring workers to sign NDAs before any incident occurs.
Ma’s research, focusing on startup companies, revealed unexpected findings. Startups operating in states with NDA-weakening laws hired approximately 8% fewer women annually compared to those in states without such legislation. The effect was particularly pronounced in small, male-dominated startups lacking formal human resources infrastructure.
The pattern appeared immediately after the laws took effect and persisted over several years. The reduction concentrated among junior-level female positions, suggesting companies were attempting to minimize perceived legal risks by avoiding hiring individuals most likely to benefit from the new protections.
Similar unexpected outcomes have emerged from salary transparency laws. Since 2021, multiple states including Colorado, New York, and California have required employers to post salary ranges in job listings. These measures aimed to address persistent wage gaps, with full-time female workers earning approximately 83% of male earnings, while Black and Latina women face even wider disparities at 66% and 58% respectively.
Alice Lee, an assistant professor of organizational behavior at Cornell, analyzed nearly 10 million job postings and discovered significant variation in posted salary ranges. While the average range spanned about $38,000, some listings covered $20,000 while others exceeded $100,000.
Lee’s research found that women demonstrated stronger preferences for positions with narrower salary ranges, suggesting that wider ranges may discourage female applicants. This pattern potentially perpetuates the very pay gaps the laws aimed to eliminate.
Additional research from the University of California, Riverside, revealed that full pay transparency can create different challenges. Workers who discovered they ranked lower in pay scales often became demoralized and less likely to request raises, while higher-ranked employees gained confidence. Some studies indicate transparency might reduce overall bargaining power and potentially decrease average wages.
Despite these challenges, Ma’s research also identified positive outcomes. While female hiring decreased, more women reached managerial positions following NDA reforms. Male manager turnover increased in affected startups, potentially creating advancement opportunities for female employees.
Workplace consultant Ruchika T. Malhotra attributes some difficulties to persistent zero-sum thinking among managers who incorrectly believe that improving equity disadvantages other groups. The World Bank has estimated that closing global gender gaps in work and pay could increase worldwide GDP by more than twenty percent.
Ma emphasizes that larger firms with established human resources departments showed no reduction in female hiring after NDA laws, suggesting that institutional support helps organizations absorb regulatory changes effectively.
Lee advocates for improvements to transparency laws, including clearer contextual information about compensation and stricter limits on salary range widths. New Jersey has proposed legislation capping posted ranges at 60% of the minimum salary.
Both researchers remain cautiously optimistic that refined approaches to workplace protection laws can achieve their intended goals while avoiding unintended consequences.
