When Good Intentions Backfire: The Unintended Consequences of Workplace Equity Laws
In the years following the #MeToo movement, a wave of legislative reforms swept across the United States. States like California, New York, and Washington moved to restrict non-disclosure agreements (NDAs) that had historically silenced victims of workplace harassment. In 2022, Congress reinforced this momentum with the Speak Out Act, prohibiting employers from requiring workers to sign preemptive NDAs before disputes even arise.
"These were reforms nearly everyone cheered for," says Song Ma, a professor of finance and entrepreneurship at Yale. "And for good reason."
Yet Ma, trained as an economist, approached these changes with a familiar caution: well-intentioned labor regulations don't always yield the outcomes their advocates anticipate. He points to historical precedents. After the Americans with Disabilities Act took effect in 1990, employment among disabled workers actually declined as some employers sought to avoid compliance costs. Similarly, "Ban the Box" policies—designed to help job seekers with criminal records—sometimes harmed young Black men, as hiring managers relied on demographic stereotypes rather than individual assessments.
Could NDA restrictions be producing a similar paradox?
The Startup Study: When Protection Deters Hiring
To investigate, Ma and his collaborators examined the startup ecosystem—an environment crucial for innovation but often lacking formal HR infrastructure, and where harassment has been well-documented.
Their findings, published earlier this year, revealed a troubling pattern: startups in states that enacted NDA-weakening laws hired approximately 8% fewer women annually compared to those in states without such reforms.
"That's meaningful when you consider the average startup in our sample hires just over one woman per year," Ma notes. The effect appeared immediately, persisted over time, and was most pronounced among junior-level women and in small, male-dominated startups with limited internal safeguards.
In essence, some companies appeared to be minimizing perceived legal risk by avoiding hiring the very individuals the laws were designed to protect.
Pay Transparency: Clarity Without Context
NDA reforms aren't the only equity-focused policies facing scrutiny. A parallel wave of pay transparency laws has swept the country. Colorado's Equal Pay for Equal Work Act took effect in 2021, followed by similar measures in New York, California, Maryland, Massachusetts, Connecticut, Nevada, and Rhode Island.
The logic is compelling: secrecy around compensation has long enabled persistent gender and racial pay gaps. Women working full-time in the U.S. earn roughly 83 cents for every dollar men earn—a figure that has barely budged in decades. For Black and Latina women, the disparity widens to approximately 66 and 58 cents, respectively.
Yet transparency alone has proven an incomplete solution.
Alice Lee, an assistant professor of organizational behavior at Cornell, analyzed nearly 10 million U.S. job postings and found that the average posted salary range spanned about $38,000, with some exceeding $100,000. This variability matters. Lee's research shows that women, on average, exhibit greater aversion to financial uncertainty and demonstrate a stronger preference for jobs with narrower salary bands.
"Wider posted ranges were associated with lower representation of women in the workforce, even after accounting for firm size and other factors," Lee explains. In other words, the current approach to transparency may inadvertently perpetuate the very gaps it aims to close.
Women in white-collar roles, speaking anonymously to avoid jeopardizing future negotiations, expressed little surprise. "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 healthcare professional in New York City. "It makes me wonder what other rules the company is trying to bypass."
Beyond Hiring: The Ripple Effects of Transparency
Complications extend beyond recruitment. Research from the University of California, Riverside, found that when employees learn how their pay compares to peers, their sense of entitlement shifts dramatically based on their relative position. Those near the top report increased confidence; lower-ranked employees often feel demoralized and become less likely to request raises. This dynamic can also dampen motivation and collaboration.
Additional studies suggest that greater pay transparency can, in some contexts, reduce workers' bargaining power and exert downward pressure on average wages.
So What Actually Works?
If equity-focused laws sometimes exacerbate inequality, what's the path forward?
**Infrastructure matters more than legislation alone.** Song Ma emphasizes that regulatory reforms succeed when organizations possess the institutional capacity to implement them. His research shows that the decline in female hiring following NDA bans occurred primarily in startups without established HR departments. Larger firms with robust internal resources saw no such reduction.
"The lesson isn't 'don't ban NDAs,'" Ma says. "It's that legal reforms work best when firms have the infrastructure to absorb them."
Notably, his study also uncovered a silver lining: while NDA reforms correlated with fewer women being hired overall, they coincided with an increase in women attaining managerial roles. The researchers speculate that male-manager turnover rose following the reforms, creating openings that firms filled with female leaders.
**Context transforms transparency.** Alice Lee argues that salary ranges alone are insufficient. If she had a "magic wand," she would require employers to supplement posted ranges with clear contextual information: typical starting salaries for the role and how the organization determines individual offers. In experiments where this context was provided, the gender gap in application preferences effectively vanished.
Lee also advocates for stricter guardrails on range width. New Jersey's 2025 proposal, for instance, would cap posted ranges at 60% of the minimum salary. Employers should also evaluate whether a single broad range genuinely reflects one role—or whether it's bundling distinct positions that warrant separate, more precise postings.
**Mindset shifts require experience, not just mandates.** Workplace consultant Ruchika T. Malhotra stresses that many organizations still operate with a zero-sum mentality—the mistaken belief that advancing equity for one group disadvantages another. "There's so much data showing otherwise," she says. The World Bank estimated in 2024 that closing global gender gaps in work and pay could boost global GDP by more than 20%.
Lasting change, Malhotra argues, requires managers to witness firsthand the benefits of inclusive workplaces: higher retention, greater employee satisfaction, and stronger financial performance. "We need a real, internal commitment to want to fix issues of unfairness and inequality," she says.
Equity-focused workplace laws represent genuine progress. But as research increasingly shows, disclosure without design, and regulation without reinforcement can yield unintended consequences.
The next generation of policy must move beyond checkbox compliance. It should focus not just on whether employers disclose information, but on whether that disclosure is meaningful, actionable, and genuinely useful to the people it's intended to serve.
External regulation will almost always fall short without internal intention. Lasting fairness isn't legislated—it's built, deliberately and continuously, from within.