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Silencing Salary Talk Can Lead to Trouble

March 27, 1999
Related Topics: Miscellaneous Legal Issues, Wages and Hours, Featured Article
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Issue:
Overhearing a group of employees comparing salaries in the cafeteria, a manager walks over to the employees' table and confronts them. She tells them salaries are confidential, employees are forbidden from discussing their salaries, and if she discovers that any of them has discussed salaries with coworkers again, that employee will be disciplined-and possibly terminated. Afterwards, the manager returns to her office and drafts the following policy that she wants you to include in the employee handbook:

As an employee, your salary is a private matter between you and the company. The company will keep this information in strictest confidence, and you are required to do likewise. Violation of this policy will result in discipline, up to and including termination.

Can the company get into legal trouble if the manager terminates an employee for discussing his or her salary with coworkers in the future? What if the company includes the manager's drafted policy in its employee handbook?

Answer: Salary discussions are concerted protected activity.
Both actions will likely be considered unlawful under the National Labor Relations Act (NLRA). Wage discussions among coworkers are generally considered to be concerted and protected activity under the NLRA. So under most circumstances management cannot prohibit salary discussions, or threaten, discharge or discipline for revealing salaries. (Moreover, retroactive application of a policy that didn't exist when the employee action took place is never a good idea!)

Can management merely say that it "prefers" salaries not be discussed?
That becomes a factual question. If the employees involved were to tell the NLRB they "didn't dare" reveal their salaries because their employer preferred they not do so, the Board would probably rule against the employer. If the employees said they felt free to talk about pay, despite management's stated "preference," the Board probably would rule for the employer. Given the state of the law, it is safer for an employer not to state any "preference" at all.

Are employers entitled to make salary information confidential?
Under certain circumstances, yes. Employers are permitted to treat salary information as confidential if there are legitimate business reasons for the confidentiality that outweigh the protected interest of employees in learning about and discussing wages. For example, an employer may be able to discharge an employee who steals confidential wage information.

Cite: National Labor Relations Act, Section 7; Service Merchandise, Inc (1990) 299 NLRB No. 160, 1989-90 CCH NLRB 16,274; NLRB v. Brookshire Grocery Co. dba Super One Foods, #601 (5thCir 1990) 117 LC 10,466.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online, and via the Internet.

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