A federal appeals court recently held that an employer’s rule prohibiting employees from discussing their wages with co-workers constituted an unfair labor practice under the National Labor Relations Act (NLRA).
The NLRA gives employees the right to form unions and engage in collective bargaining. It also gives union and non-union employees the right to engage in “concerted activities” for the purpose of “mutual aid or protection.”
In NLRB v. Main Street Terrace Care Center (6th Cir. 2000), a former employee of a non-union company sued her former employer and challenged the employer’s unwritten rule prohibiting employees from discussing their wages with one another. The United States Court of Appeals for the Sixth Circuit held that the employer’s rule prohibiting wage discussions violated the NLRA. In so holding, the court reasoned that employee communications with one another regarding wages is a key objective of organizational activity and a rule prohibiting such communications tends to interfere with the employees’ right to engage in “protected concerted activity” under the NLRA. Significantly, the court found the “no wage discussion” rule to be unlawful under the NLRA even though the rule was not in writing and had never been enforced by the employer in the past.
The court’s holding in Main Street Terrance is consistent with prior rulings of other federal courts and the National Labor Relations Board. The Board has long presumed that an employer’s blanket policy of prohibiting wage discussions amongst its employees, regardless of the time and place of such discussions, violates employees’ right to engage in protected concerted activities under the NLRA. The Board’s position has been recognized or affirmed by several federal appellate courts, including the Third, Sixth, and Eighth Circuits.
It is important to note that not all policies or rules prohibiting wage discussions violate the NLRA. A “no wage discussion” rule is permissible if the employer can prove it has a “legitimate and substantial business justification” for the rule that outweighs the employees’ right to engage in protected concerted activity. For example, a rule that only prohibits employees from discussing their wages during work hours would most likely be permissible. Such a rule would promote employee productivity during their work hours and the employees would be able to discuss their wages during breaks or before or after work.
Additionally, in some circumstances, a rule prohibiting employees from disclosing the employer’s confidential wage data may be permissible under the NLRA. It would likely depend on the nature of the wage data, whether the wage data is truly confidential, and whether the employer has taken adequate steps to maintain its confidentiality. However, even under this type of rule, employees could not be prohibited from discussing their own wages with other employees.
In sum, employers should be careful when making rules or policies prohibiting employees from discussing their wages with one anther. In most circumstances, a blanket rule prohibiting wage discussions will constitute an unfair labor practice under the NLRA. Nevertheless, employers can implement limited forms of a “no wage discussion” rule, but the rule must have a legitimate and substantial business justification that does not outweigh its employees’ right to engage in protected concerted activities.
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