Can an employer in the U.S. create a company policy that prohibits employees from discussing pay rate and salary levels with other employees? The short answer is no—with exceptions, of course.
NLRA Allows Employees to Engage in Pay Discussion
Companies covered by the National Labor Relations Act (NLRA) cannot limit employees’ concerted activities for the purpose of “collective bargaining or other mutual aid or protection,” according to Section 7 of the NLRA. Generally, when an employee or a group of employees is acting to improve working conditions, they are engaging in concerted activities.
Over the years, the National Labor Relations Board (NLRB) has ruled clearly on the side of employees’ rights to discuss salary and wages. See examples of NLRB decisions below.
As of 2016, at least 14 states had enacted laws protecting workers’ right to discuss wage and salary rates. These laws typically prohibit employer retaliation against employees for discussing wages. They also notify employees that they are under no obligation to disclose wage information.
NLRB Cases Protecting Employees’ Rights to Discuss Wages and Compensation
The NLRB hears cases of potential violation of the NLRA to decide if employers are violating workers’ rights to perform concerted activities for the improvement of working conditions or worker representation. Here are some examples from the past three decades of NLRB decisions.
1989 – Brookshire Grocery v. Mark Moise
- Mark Moise noticed several sheets containing wage increase information in a supervisor’s office.
- Moise did not trespass to access the payroll information, which was kept in a location that he routinely entered as part of the normal course of his duties.
- He copied the wage information concerning each employee and then shared the information with several employees.
- He was terminated by his employer, but the NLRB ruled that the employer could not prohibit employees from discussing wages.
- They also found that the interrogation of several employees about the incident violated Section 8. [§ 158.] (a) (1) of the NLRA by interfering with, restraining, or coercing “employees in the exercise of right guaranteed by the NLRA.”
1990 – Service Merchandise Company, Inc. v. Priscilla Jones
- The employer violated the NLRA by distributing and enforcing a company policy forbidding all wage discussions.
- To take “affirmative action” (i.e. remedy the situation) the company had to revise its policy and post the following Notice to Employees at each of its locations:
The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice.
Section 7 of the Act gives employees these rights:
- To organize
- To form, join, or assist any union
- To bargain collectively through representatives of their own choice
- To act together for other mutual aid or protection
- To choose not to engage in any of these protected concerted activities.
WE WILL NOT distribute, maintain, or enforce rules prohibiting you from discussing your wages or other terms or conditions of employment with others.
2011 – Ambriola, Co. v. Unnamed Charging Party
- Supervisors at an Ambriola cheese processing plant announced merit pay increases, but told employees they were prohibited from discussing the extent of their pay increases, or risk being fired.
- Employees talked anyway, and at least one was fired for discussing the pay increases.
- The NLRB ruled this to be in clear violation of the NLRA.
Exceptions to the Rule: Who Can’t Discuss Pay?
- An employee whose job function involves access to company wage and payroll information may not disclose employee pay information to other employees unless directed to by the employer or an investigating agency.
- Employers not covered by the NLRA, including municipal governments and religious schools. Workers in organizations that are not covered by the NLRA are subject to the policies of their respective employers and may be unable to discuss pay levels. Check to see if the NLRA applies to your employer here.
- Federal Contractors- discuss with caution. In March 2017, President Trump signed a bill that rolls back Obama’s 2014 Fair Pay and Safe Workplaces executive order, which provided protection for workers engaged in protected activity. Make sure you understand your employer’s policies before discussing pay.
The Takeaway for Employees
In many organizations, there still exists an informal understanding that one does not discuss pay in the workplace. In defiance of federal protections, some companies even continue to impose prohibitions of pay discussion.
Check the applicable laws. In many situations, you have the right to engage in activity to “improve pay and working conditions” for you and your coworkers. Be aware that actions not intended to improve pay and working conditions (e.g., a personal gripe) are not considered protected activity.
The Takeaway for Employers
If you have or are considering a policy restricting employees’ discussion of wage and compensation, carefully review Section 7 & 8(a)(1) of the NLRA. Keep in mind the NLRB has historically considered such discussion protected concerted activity.