Can I Prohibit My Employees from Discussing Their Wages?
The conversation around employee wages has gained significant traction. As organizations strive for transparency and equity, employers may wonder whether they can prohibit their employees from discussing their wages. This article explores the legal framework around wage discussions, the effect on workplace culture, and best practices for employers.
The Legal Landscape
National Labor Relations Act (NLRA)
To get right to the point, prohibiting employees from discussing their wages is generally not permissible under US Law. The NLRA is a federal law that protects employees’ rights to engage in “concerted activities” for their mutual aid or protection. This includes the right to discuss wages and working conditions. Section 7 of the NLRA explicitly grants employees the right to communicate about their compensation without fear of retaliation. Employers also cannot implement policies that prohibit wage discussions. These policies can be deemed unlawful and may expose you to legal repercussions, including unfair labor practice charges.
State and Local Laws
In addition to federal law, many states and municipalities have enacted their own regulations regarding wage transparency. Some jurisdictions require employers to disclose salary ranges in job postings during the hiring process (such as the recently passed Wage Range Transparency law in the state of Maryland, which goes into effect October 1, 2024). These laws help reinforce employees’ rights to discuss their wages, and employers who break these laws could be subject to hefty penalties.
Are There Any Exceptions?
Some exceptions may exist, for example, employers implementing confidentiality agreements for specific roles involving sensitive information such as proprietary compensation structures or business practices or disclosing someone else’s wages without their permission. However, these agreements should still not restrict discussions about wages among employees.
The Effect on Your Workplace Culture
When you try to prohibit discussions around wages, the most common side effect is a lack of trust among employees. When workers feel they cannot openly discuss their pay, it can foster both suspicion and resentment. While it might push many employers outside their comfort zone, transparency about compensation can enhance trust, morale, and collaboration within the team. It also makes things like recruiting, promoting, transferring, and establishing professional development goals much easier. When you don’t have to dance around the subject of wages so carefully, everyone can breathe with a sense of ease.
Employers who encourage open discussions about wages will find it leads to greater employee engagement. Employees who feel they are fairly compensated and have the opportunity to discuss their pay, or when they don’t have a sneaking suspicion their neighbor in the next office might be covertly making more than them, they may be more likely to remain satisfied and committed to their organization. In contrast, when employers are secretive about wages, this can drive talented employees to seek employment elsewhere.
Transparency in wages and compensation also improves employee perceptions of an employer before they even walk through the door (and can save you a few bucks, too). According to PayAnalytics, Pay transparency in job postings has even been found to provide a better return on advertising expenses, lowering cost-per-click by up to 35%.
Best Practices
Open Communication is Key
The first step to besting a topic widely thought to be taboo is to stop making it feel taboo. Instead of trying to disallow discussions around wages, create an environment where this topic is more comfortable to discuss. You can do this by encouraging open dialogue about pay structure, benefits, and performance expectations and by regularly communicating the rationale behind compensation decisions to help employees understand how pay levels are determined.
Conduct Regular Pay Audits
Equity and fairness are integral here, both from a moral standpoint and a legal standpoint. Conduct regular pay audits to identify discrepancies based on gender, race, or other factors. Being proactive about pay equity demonstrates a commitment to fairness and stops potential grievances from happening.
Offer Competitive Pay
One of the best ways to minimize wage discussions is to ensure that what you’re paying employees is competitive in your industry. Use regular salary surveys, market data, and compensation analyses to adjust salaries and meet or exceed market standards. If you keep up, there’ll be less worry that your employees will feel any degree of unfairness in their compensation.
In The End
To recap, the short answer is that prohibiting employees from discussing their wages is generally not permissible under US law, and by many state and local laws, but the longer answer is, instead of trying to hush talks about money, employers should instead focus on creating a work environment where wages can be transparently discussed, where employees feel fairly compensated, and where equity and value for work produced prevail. By doing so, you can help improve employee satisfaction, trust, and retention, ultimately benefiting your entire organization.
Our HR Business Partners are experts in compensation and workplace culture. Reach out to us today about how we can help your business navigate complex HR matters.
