Typically, a promotion means more responsibility and more work. That’s why it is often accompanied by a pay raise.
Unfortunately, promotions without pay increases are becoming more common as companies struggle to stay profitable or at least solvent. Many have hiring freezes that require them to promote from within, but they don’t have the money needed for added compensation. No-raise promotions are sometimes referred to as “dry” or “ghost” promotions.
Are these promotions always legal?
People are often surprised to learn that legally employers often aren’t required to increase an employee’s wages when they promote them unless an employee’s contract, a company policy or a union agreement prohibits no-raise promotions.
Employers also cannot have a pattern of using dry promotions to discriminate based on protected characteristics like race, gender, disability, religion and age. For example, if most of the employees being promoted without a salary increase are female while most men who are promoted do receive raises, that could potentially be grounds for a discrimination suit.
Should an employee consider accepting a “dry” promotion?
Sometimes an employer will promise a raise “later” or “when things pick up.” However, unless they commit to that in writing, they likely can’t be held to that promise. An employee also may be able to negotiate valuable perks like more paid vacation time or greater opportunity for bonuses or non-economic perks like the ability to work remotely. It’s wise to get these things in writing.
Employees often find it beneficial to take a promotion even if it means doing more work for the same amount of money. A more senior position can look good on their resume and help them get a higher-paying job elsewhere. It can also give them valuable experience, like supervising a larger group or having responsibility for a larger portfolio.
California employees who believe that they have illegally been denied a raise when they received a promotion may benefit from getting legal guidance to determine their rights.