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The Price of Silence: Management Restrictions on Employee Salary Discussions

Limited employee salary discussions could result in increased liability
Limited employee salary discussions could result in increased liability
EEO Consultations

Recently, while conducting a policy audit for a local mid-sized business, I came across the following provision in the company’s employee handbook:

“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.”

Such policies, limiting discussions about salary and benefits amongst employees are quite common, either in the form of a formal written policy as in the above case or a general policy of such discussions being frowned upon in the workplace. The problem is that such a policy, whether formal or informal, is likely illegal under the National Labor Relations Act (NLRA).

At 29 USC § 157, the NLRA provides “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment.” 29 USC § 158(a)(1) further states that “It shall be an unfair labor practice for an employee to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title.”

Both the National Labor Relations Board (NLRB) and Courts have consistently held that limitations on salary discussions is a violation of federal labor law as it limits employees’ right to “engage in concerted activities” as provided for by the NLRA. Both have held that it is okay to limit such discussions during time periods when employees are supposed to be working. Thus, an employer may limit such discussions, along with general non-work related discussion while the employee is actively engaged in work, but would not be at liberty to do so while employees are taking a break or lunch in the company cafeteria. The other limitation applies when employees access files, information or offices without permission to obtain the salary or benefit information. By doing so, said employees who obtain salary or benefit information through unauthorized access essentially waive their protections under the NLRA.

Thus for employers covered by the NLRA, which generally includes most employers, with the exception of federal, state and local governments, as well as the airline and railway industries. Furthermore, the NLRA applies to both unionized and non-unionized employees, thus there is not no exception for companies that do not have union employees. Based upon the above, policies limiting salary and benefit discussions amongst employees should be reviewed with scrutiny as employees have a nearly absolute right under the NLRA to engage in discussions regarding their wages and it is a violation to discipline employees for engaging in such discussions.