Salary discussions in the workplace can lead employees to question why they don’t earn as much as their co-workers. This is especially a concern when bonus talk takes place. To avoid these issues, many employers attempt to limit conversations among co-workers about pay. But such restrictions can leave you at risk of a lawsuit, as demonstrated by a new California appeals court ruling.
Marketing Directors Discuss Bonuses
Sharron Grant-Burton was the marketing manager for the Long Beach-based Candlewood Care Facility, which was owned by Covenant Care. During a monthly meeting of Covenant marketing directors, the subject of the bonus structure at the various facilities was raised. Several directors shared their bonus policies, while others indicated they didn’t receive bonuses.
Grant-Burton allegedly said that she didn’t get a bonus because her supervisor, D’Anna Westbrook, didn’t believe in them. She also explained that she wasn’t concerned because Covenant was paying for her continuing education, which recently permitted her to switch to a new position.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Bonus Talk Leads To Firing
Six days after the meeting, Westbrook fired Grant-Burton, allegedly explaining that it was because of something Grant-Burton said at the directors’ meeting. Westbrook also said, “This is an at-will company, and I don’t need a reason to fire you.” The termination papers indicated Grant-Burton was fired for a violation of company rules. When Grant-Burton appealed the termination, she received a letter from Covenant stating that the bonus discussion led to her termination.
Grant-Burton sued, claiming she was wrongfully terminated in violation of public policy. She pointed to a state law that prohibits employers from discharging an employee who discloses the amount of their wages, which includes bonuses and any other type of compensation for labor performed. And, she contended, federal labor relations law protects pay discussions. After a trial court dismissed the lawsuit, she appealed.
Pay Discussions Can’t Be Restricted
Now a California appeals court has ruled that Grant-Burton’s wrongful termination lawsuit can go forward. The court explained that even though at-will employees may be terminated for no reason or for an arbitrary reason, they cannot be discharged for a reason that violates a public policy.Both a state law and federal labor relations law state a public policy against terminating employees for discussing bonuses, the court said.
In particular, the California Labor Code forbids disciplining or discharging an employee who discloses the amount of their wages, which in- cludes bonuses. And, said the court, although Grant-Burton and the other marketing directors weren’t union members or governed by a collective bargaining agreement, the National Labor Relations Act protected their participation in a group discussion about the fairness of their compensation.
Avoiding Problems From Pay Talk
As this case demonstrates, it’s illegal to terminate an employee—even an at-will employee—for discussing their pay with co-workers. What’s more, even nonunion workers may be covered by the National Labor Relations Act, which protects group activity by employees about the terms and conditions of employment, including wages and bonuses.
Here are suggestions to help avoid problems:
- Don’t discourage pay discussions. Be sure you don’t do anything to restrict workers from sharing pay information.
- Educate supervisors. Make sure supervisors know not to warn employees to keep quiet about their wages.
- Review your policies. Remove from your employee handbook any requirements for employees to maintain confidentiality about pay.
- Remember that wages include more than salary. Not only can employees disclose their base salary but requiring them to keep bonuses or commissions secret would also run afoul of state and federal law.
- Offer fair compensation. Use objective measures to determine salaries, and apply these standards to all employees in a job category. Document how you came up with the employee’s salary, including bonuses. If an employee complains about their pay based on a discussion with other workers, you’ll be able to back up your compensation practices.