The question of whether employees can discuss their salaries at work has been a topic of the break room and water cooler whispers for decades. As an employer, you may feel your legal rights are violated by employees discussing their wages. But, legally speaking, is it permissible to fire them for that? Is there an employer's right to privacy?
This blog post covers the laws and regulations surrounding the topic of salary discussion at work. We'll discuss the National Labor Relations Act (NLRA) and the implications of working in an "at-will" state. We'll also go over what you can do as an employer if you feel your staff is discussing pay inappropriately and the potential legal implications of doing so.
Is salary confidential?
The answer to this question is a bit complicated. While employers can't prohibit employees from discussing compensation with each other, some degree of confidentiality is still expected.
For example, if someone goes to the Human Resources Department and requests information on their co-worker’s salary, the HR department cannot provide that information without the employee's permission, as it is considered a part of their confidential employee record.
However, it is not illegal for employees to discuss their salaries amongst themselves. They have every right to share their wages with their coworkers, but others do not have the right to solicit this information.
What is the law regarding discussing salary?
According to the law, employees in the United States have the right to discuss their wages with each other. This is outlined in the federal law known as the National Labor Relations Act (NLRA), which was put into place to protect workers from unfair treatment.
The law states that employers cannot interfere with employees' rights to discuss wages, pay raises, hours, and working conditions. It also says that an employer cannot retaliate against an employee for engaging in such conversations. It's important to note that retaliation isn't just limited to employment termination. Employers are prohibited from taking any action that may be considered adverse such as demotions, reductions in pay or hours, suspension, and other forms of discrimination.
How did the rumor of termination start?
While most people know they cannot be fired due to their age, race, religion, and gender, many still wrongfully believe they can be terminated or penalized for discussing their wages.
This belief stems from social taboos, company cultures, and many internal policies that employers have established to protect the confidentiality of their employees' salaries.
Taboos around talking about money in the workplace are common, as many people are taught it's rude and inappropriate to discuss money in public. Companies often foster cultures that discourage salary discussion to prevent arguments and disputes amongst their staff and, ultimately, save money. As a result, many employers have added language in their handbooks or policies prohibiting salary discussions with other employees.
These policies generally state that employees cannot discuss their salary with anyone outside the company and may even note that discussing wages within the workplace is prohibited.
In a situation where employee A makes more than employee B for the same job, employee B may be inclined to bring up the issue of pay disparity with their employer. To avoid potential complications or unsatisfied employees, many employers will try to discourage salary talk among their staff. After all, they will never know what the pay scale really looks like if they can't talk about it.
However, these policies are not legally binding and do not supersede the laws put in place by the NLRA. Employees terminated for discussing pay can file a grievance with the National Labor Relations Board (NLRB). If the case goes before a judge, an employer could be found in violation of the NLRA, and an employee could be compensated for lost wages and benefits.
What is NLRA legislation?
The NLRA, or National Labor Relations Act, is a federal labor law that was enacted in 1935, affecting the way you can regulate your employees and how they can interact with each other. It grants your employees the right to form unions, collective bargaining, and engage in other activities such as strikes or salary discussions with each other.
The law reinforces the idea that employees should be able to stand up for themselves and ensure they are treated fairly by their employers. It is also designed to protect employers from unfair labor practices.
While many assume that the NLRA doesn't apply to non-union employees, it provides certain protections to all employees regardless of whether they are in a union or not. So, whether your office is big or small, unionized or non-unionized, not abiding by the NLRA can land you in hot water.
I live in an at-will state; does NLRA affect me?
Another popular misconception is that employers from at-will states can fire employees for any reason. However, that's not what "at-will" means. In any at-will state (basically every state except Montana), employers and employees have an employment relationship at the will of both parties.
This means that either party can terminate the employment relationship for any reason as long as it's a legal one. The NLRA still applies in at-will states, and employers cannot fire employees for salary discussions or any other protected activity. Termination for such a reason will still be considered an unfair labor practice and may result in legal action.
What if my staff signs a non-disclosure agreement?
Non-disclosure agreements (NDAs) are confidentiality contracts, typically between employers and employees. NDAs protect information such as trade secrets, customer data, sales strategies, and more. They are law-binding documents that can be enforced in a court of law if necessary.
The NLRA does not prevent employers from having their employees sign non-disclosure agreements, but it does put limits on the type of information that can be included. Specifically, employers cannot include language prohibiting employees from discussing their wages, working conditions, or other activities protected by the NLRA. So, while NDAs can be used to protect certain information, they should not include anything that infringes on the rights of employees, according to the NLRA. The same applies to secrecy clauses and other types of employee contracts.
What can I do to prevent employees from discussing pay?
While employers cannot legally prevent their employees from talking about pay, they can reduce workplace resentment and negative emotions from workers not being aware of the reasons behind wage differences by being more transparent about how salary is determined.
The following practices can help you foster a positive environment and ensure wage conversations are more constructive:
- Have a clear pay structure in place that outlines how wages are calculated, taking into account performance, education, and experience.
- Create an open dialogue about pay and wages in the workplace so that employees feel comfortable asking questions without fear of reprisal.
- Ensure everyone is aware of the company's policies and procedures when it comes to discussing wages so that employees know what is and isn't acceptable.
- Have an open-door policy for employees to voice their concerns about wage disparities, working conditions, or other labor-related issues.
- Help employees understand their salary ranges and job potential so that they can set realistic expectations for their career growth.
- Conduct regular surveys and performance reviews so that employees can better understand how their work is valued.
- Pay people fairly in the first place: this may seem obvious, but it is essential that employees feel they are being paid according to the value they bring to the organization.
Hopefully, it should be clear that you shouldn't interfere with your employees discussing their salary or other labor issues. Pay equity is a hot topic in the U.S., and employers should know their legal obligations to their employees.
When an employee raises the question of pay, consider bringing in an HR team to help guide the conversation and provide additional information. By giving employees all of the necessary facts, you can ensure that wage conversations are conducted in an appropriate, respectful manner.
The CAVU HR Management suite can help you stay on top of all labor-related matters, from compliance to pay equity. Our combination of software and concierge services is designed to give you the tools you need to ensure a safe and fair work environment for all your employees and manage your day-to-day HR tasks easily. Working with CAVU's dedicated HR Advisor team, you'll always be up-to-date with the latest labor laws and regulations - giving you peace of mind that your business is in compliance and your employees are treated fairly.
With over two decades of experience, CAVU HCM is the perfect partner to help your business navigate its labor obligations and build a successful team. To learn more about how CAVU HCM can help your organization, contact us today.