United States: Putting Her Money Where Her Mouth Is: An Employee’s Right To Discuss Her Salary With Co-Workers

Many companies have policies, either official or unofficial, that prohibit or discourage employees from discussing their salaries with other employees. When implementing these policies, companies often have in mind the goal of preventing employee competition and resentment. What most employers do not consider is that their policy is a violation of law, specifically, the National Labor Relations Act, § 1 et seq., as amended, 29 U.S.C. § 151 et seq. (the "Act"). Among other things, the Act gives employees the right to engage in "concerted activities for the purpose of collective bargaining or other mutual aid or protection" and makes it a violation for employers to "interfere with, restrain or coerce employees in the exercise of th[is] right." 29 U.S.C. §§ 157, 158.

Both the National Labor Relations Board ("NLRB") and various courts have interpreted these provisions as establishing, with little exception, the right of both union and non-union employees to talk about their wages and other details of their employment as they please. An employee who suffers termination or some other negative action as a result of exercising this right can be entitled to reinstatement, back pay with interest and publication of a statement that his or her rights were violated by the employer. Employers should keep in mind that even when there exists a legitimate reason for firing or otherwise disciplining an employee, if the employee’s discussion of salary information with other employees infects the decision, the company may have violated the NLRA and could be ordered to take remedial action. See Jeannette Corp., 217 NLRB 653 (1975), enf’d 532 F.2d 916 (3d Cir. 1976).

So how can you tell if your company is at risk of violating the NLRA? Below are three proven ways to violate the Act and subject your company to liability.

1. Include a policy in your employee handbook prohibiting salary discussion. One of the most common mistakes that a business makes is including a provision in its employee handbook prohibiting or discouraging salary discussions. It is clear that a blanket rule against such discussions among employees is unlawful under the NLRA. Indeed, not only enforcement of the rule is objectionable; its mere existence can constitute a violation of the Act. See NLRB v. Main St. Terrace Care Ctr., 218 F.3d 531 (6 th Cir. 2000). In the eyes of the NLRB and many courts, the existence of such a prohibitive rule has a tendency to interfere with the right of employees to engage in the activities and conversations protected by the Act. See id. at 537. It also is important to keep in mind that even policies against nonverbal salary disclosure can violate the Act. For example, a rule prohibiting employees from opening their paychecks in the office has a tendency to restrict the employees’ rights under the NLRA. See Wilson Trophy Co. v. NLRB, B989 F.2d 1502 (1993).
2. Make it a practice to have supervisors discourage the discussion of wages. Even where there is no written policy in a handbook or elsewhere, an employer can violate the NLRA by verbalizing such a rule. In fact, a single supervisor who discourages salary discussion can violate the Act. This is true whether the supervisor tells the employee that the company has a policy against salary discussions or simply admonishes the employee to refrain from such discussions. This also is true even when the statement does not actually cause the employee to feel inhibited in his right to discuss wages or when the employee ignores the warning. See Waco, Inc., 273 NLRB 746 (1984). As in the case of the written policy discussed earlier, it is the propensity of the prohibition to chill an employee’s feeling of liberty to discuss his or her salary that concerns the NLRB.
3. Implement an overly broad confidentiality policy. Believe it or not, even an employer’s general confidentiality policy can violate the NLRA. For example, a written policy instructing that "information concerning patients, associates, or [company] operations should not be discussed either inside or outside the [company]" violates the Act. Brockton Hosp. v. NLRB, 294 F.3d 100 (D.C. Cir. 2002). How so? According to the NLRB, such a broad policy could convey to employees (or "associates," as used in the Brockton policy) that they are restricted from discussing salary and other employment terms among themselves. More narrow confidentiality policies prohibiting talk specifically about "office business" or "company-private information" do not convey such a restriction and therefore do not violate the Act. In re K-Mart, 330 NLRB 29 (1999); Lafayette Park Hotel, 326 NLRB 69 (1998).

Despite the broad reach of the NLRA, not all restrictions on salary discussions are unlawful. If a company has a legitimate business reason for placing restrictions on these discussions, the NLRB will allow the policy to stand. This sometimes arises when an employee discloses information about other employees’ salaries. For example, an employee who comes across the confidential salary information of other employees and discloses that information to other employees might not be protected under the Act. See IBM, 265 NLRB 638 (1982). Also, an employer – for reasons of efficiency – may be able to impose a policy limiting general discussion among employees during working hours, which would include discussion regarding salaries. See Jeannette Corp. v. NLRB, 532 F.2d 916 (1976). It is clear, however, that a mere desire to curb jealousy and strife among employees is not a sufficient business justification to prohibit discussion of employee wages. See id.

If an employer violates the Act, it sometimes can remedy the situation by repudiating its actions. According to some authorities, a company can fix a violation of the NLRA by timely and unambiguously retracting or otherwise denouncing its policy against salary discussions. The repudiation must specifically address the unlawful conduct and the employer must follow up by publicizing the repudiation to those employees involved in the matter. Wilson Trophy Co. v. NLRB, 989 F.2d 1502 (8 th Cir. 1993).

In summary, employers are prohibited from impairing their employees’ rights under the NLRA to disclose or discuss their salaries with co-workers. Companies should take steps both to remove any unlawful policies from handbooks and other company information and to educate supervisors about the Act. Taking these preemptive measures can serve the dual purpose of protecting your employees’ rights while reducing your chances of violating the Act and subjecting your company to monetary and other remedial measures by the NLRB. Robinson, Bradshaw & Hinson, P.A. is a business law firm specializing in complex corporate transactions and litigation. For over forty years, the firm has consistently provided innovative solutions to its clients’ business needs from both a legal and practical perspective. The firm serves as counsel to public and closely held corporations operating in domestic and foreign markets; limited liability companies; limited and general partnerships; individuals; municipal, county and state agencies; public utilities; health care institutions; financial institutions and tax-exempt organizations.