It’s not unusual for employers to have a policy prohibiting workers from disclosing their salary to colleagues. And many a star employee has gotten a big bonus but been warned in hushed tones not to tell co-workers about it. What many employers don’t know is that both these practices are against the law. And, as a recent case pointed out, it’s also illegal to fire employees for talking about their compensation. We’ll look at what happened in that case, and at the federal and California rules that apply.
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Nursing Home Aide Warned
When Mary Craig started work as an aide at the Main Street Terrace Care Center, the supervisor who hired her told her not to talk about her pay because it would cause hard feelings among other employees.
Craig’s daughter also went to work at Main Street Terrace and was told by a different supervisor that employees were forbidden to discuss their pay with anyone at work.
Craig often helped other employees solve problems they had with incorrect overtime calculations and pay rates. In the course of doing so, she broke her employer’s rule by comparing notes with her co-workers about wages. As a result, Craig was fired despite having received an outstanding performance evaluation.
She responded by filing an unfair labor charge with the National Labor Relations Board. Craig claimed that employees have the right to talk to each other about their compensation and that Main Street Terrace acted illegally in firing her for engaging in this protected activity.
Employer Says No Policy Existed
Main Street Terrace contended that if any supervisors warned workers against talking about wages, they were acting without management authority. And it claimed that it had no written rule forbidding pay discussions. What’s more, Main Street Terrace said Craig was fired because she was disruptive and didn’t get along with her co-workers.
Nursing Home Broke The Law
The NLRB ruled in Craig’s favor, and the federal Sixth Circuit Court of Appeals agreed, pointing out that Main Street Terrace’s supervisors had the authority to hire, fire, discipline and transfer employees. Consequently, their warnings could discourage employees from taking part in legally protected activities such as communicating with each other for mutual aid about workplace issues, including wages. The court also said Main Street Terrace showed no legitimate reasons for firing Craig.
California Law Prohibits Pay Pacts
Similar to federal law, California law prohibits employers from preventing workers from disclosing how much they earn. Likewise employers may not discharge, discipline or discriminate against employees who do so. And employees may not be required to sign waivers agreeing not to disclose their pay.
How To Avoid Getting Sued
In virtually every organization, employees receive different pay rates and varied levels of other compensation such as bonuses. Although some employers might prefer that compensation arrangements be kept private, be sure that you don’t do anything to discourage workers from sharing pay information, and that supervisors know not to warn employees to keep quiet about their wages.
Mary Maloney Roberts, a partner with the Oakland office of the law firm of Crosby, Heafey, Roach and May, also recommends that you review your employee handbook and remove any requirements for employees to maintain confidentiality about pay.