At worst, when employees discuss their salaries at work is akin to opening a Pandora’s box. It can, for example, cause tension between employees, resentment toward management and a hostile work environment.
To prevent this outcome, you might consider developing a policy that prohibits employees from discussing their pay with their co-workers. But before you do that, remember that you may run afoul of federal law.
Under Section 7 of the National Labor Relations Act (NLRA), private-sector employees have the right to discuss the terms of their employment, including salary and benefits. Further, Section 8 of the NLRA prohibits employers from violating employees’ rights under Section 7 — thereby making company policies that forbid employee salary discussions illegal.
The NLRA also prohibits overly broad policies that could be reasonably interpreted as barring employees from discussing their salary or other terms of their employment.
As for coverage, the NLRA extends to union and nonunion workers. However, there are some exclusions, including public-sector employees, agricultural and domestic workers, airline employees, and independent contractors.
Certain limitations may affect coverage — such as the manner in which employees receive the salary information they are discussing. According to the Texas Workforce Commission, employees are covered under the NLRA if:
They are discussing their own salary information.
They are discussing others’ salary information that they “obtained through ordinary conversations with others.” They might not be covered if the salary information they are discussing was accessed through unauthorized means.
Some states have implemented “pay secrecy” laws, which protect employees who discuss their salary with their co-workers.
For example, in California, employers cannot “require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.” Further, they cannot require that employees sign any document that aims to deny them their right to discuss their pay at work, nor can employers formally discipline, terminate or discriminate against employees for disclosing their wages.
Instead of attempting to limit salary discussions, consider the following alternatives:
Pay employees fairly, within the established salary ranges.
Offer salaries that are competitive in the job market.
Advise employees that it’s fine to have discussions at work, but that it’s best to exercise moderation when having these conversations. When giving this advice, do not specifically point out salary or benefits as discussion topics; instead, speak in general terms.
Avoid overly broad policies that could be construed as you prohibiting salary discussions.
Be as transparent as possible when explaining your compensation program, including how salaries are determined.
Promote an open-door policy, where employees can feel comfortable approaching their managers about sensitive topics such as pay and benefits.
Frequently evaluate your compensation program, and adjust it as necessary to ensure fair and competitive pay.