You should explain the malus. It's an extra calculation that reduces a person's elo from their true elo, because they are still fairly new with few games.
The elo you see in the lobby for balancing purposes is true elo minus malus. The elo you see in the ladder is just true elo, but I assume it's being ordered by elo minus malus. That is not ideal.
Perhaps anyone with malus still above zero should not be included in the ladder. Once they play enough games and their malus is zero, rank them in the ladder.