Can Employers Prohibit Employees From Discussing Their Salaries?

As we approach the end of the year, many employers are in the process of completing annual performance reviews and making decisions related to employee compensation.  As a result of normal water cooler talk and office scuttlebutt, employees are often tempted to discuss their respective raises and bonuses (or lack thereof).  Employers naturally would prefer that employee compensation figures remain confidential.  However, employers should be careful before implementing policies formally banning employees from discussing their respective compensation levels with one another.

The National Labor Relations Board ("NLRB") has stated on multiple occasions that an outright ban on non-union employees discussing salary and benefit information violates the National Labor Relations Act (the "NLRA").  More specifically, Section 7 of the NLRA (29 U.S.C. § 157) provides employees with the right to engage in certain "concerted activities."  The NLRB has interpreted such "concerted activities" to include employees' rights to discuss salary and benefit information.  Moreover, Section 8(a)(1) of the NLRA (29 U.S.C. § 158(a)(1)) makes it unlawful to violate an employee's Section 7 rights.  Consequently, based on these two provisions, the NLRB has consistently held that employers may not outright prohibit employees from discussing their wages and benefits.

By way of example, the Texas Workforce Commission (the "TWC") specifically cites to the following provision as likely running afoul of the NLRA:

Confidentiality of Salary and Benefit Information

Employees are prohibited from discussing their salary or wage levels and company benefits with other employees.  Such information is confidential and may not be discussed in the workplace.  Any employee violating this policy will be considered to have committed a breach of confidentiality and will be subject to disciplinary action, up to and possibly including termination of employment.

However, the NLRB's position is not without limits.  Under the NLRA, employees are allowed to discuss their respective wages and benefits, but the law does not require employers to permit employees to do so during normal work hours.  Rather, employers are free to limit workplace communications to issues related to work performance.  However, employers should be careful not to single out a prohibition against discussing wages and benefits, as this might be sufficient evidence of an intent to restrict employees' Section 7 rights and subject an employer to potential liability.  Instead, employers would be better served to generally include references to proper workplace communications and attempt to address the salary and benefits issue by implication while not expressly prohibiting such communications.  This is clearly a difficult line for employers to toe.

Section 7 protections also only apply to communications designed to advance a group goal, e.g., communications designed to promote equal pay in a certain department.  Therefore, if an employee merely boasts to other employees about his compensation level in an effort to impress others, such communication will likely not be protected.  On the other hand, if employees are discussing pay discrepancies amongst one another in an effort to obtain equal pay, these communications are much more likely to be protected.  Accordingly, employers must be careful to always evaluate the context under which salary and benefit information were discussed.

Employees also may not discuss fellow employee information protected for privacy purposes under other statutes, e.g., the Americans with Disabilities Act (the "ADA") or the Health Insurance Portability and Accountability Act ("HIPPA").  Furthermore, employees are not protected if they take covert actions to impermissibly obtain salary and benefit information of other employees, e.g., impermissibly accessing information related to another employee's compensation.  Rather, Section 7 is designed to protect employees from sharing their own personal information in an open forum.

How should employers address this issue?  If employers include language similar to the provision referenced above by the TWC, they should consider revising the policy to emphasize the sensitivity of the information, but stating that nothing in the policy is designed to prevent employees from discussing their wages, benefits, compensation and other work conditions.  Otherwise, employers must weigh the risk of liability against the reward of hoping that employees will follow the policy and not discuss their wages and benefits.  The NLRB has made it clear that it will liberally construe such policies in favor of employees' rights to discuss workplace conditions.

bstork, employment law