HR Management & Compliance

Employee Handbooks: Beware Provisions Requiring Employees to Keep Wages Confidential

Does your employee
handbook contain language requiring employees not to discuss confidential
company information, including pay? If so, it’s time to make some revisions. As
Longs Drug Stores recently discovered when it was hauled before the National
Labor Relations Board (NLRB) on unfair labor practice charges, this kind of
policy may violate federal labor relations laws.


Broad Confidentiality

Longs Drug Stores
California, Inc., has retail drug stores in California along with warehouse and
distribution centers, including one in Lathrop.


Longs distributed an
employee handbook to its employees. The Corrective Action/Employee Conduct section
of the handbook stated that unauthorized disclosure of confidential information
regarding customers, employees, or the business of the company could result in
disciplinary action, including termination. That section further stated: “Your
pay is confidential company information and should not be discussed with fellow


However, employees
reportedly did discuss wages without being disciplined. And, there was a chart
posted in the break room identifying wage rates by job classification.


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Union Claims Handbook
Was Chilling

Longs human resources
manager Larry Gilbert, responsible for enforcing this policy, believed that
individual wage rates amounted to confidential information under the policy.
Following a union organizing campaign at Longs’ Lathrop facility, an election
was held and the union lost. The union then marched to the NLRB, arguing that
the election should be set aside. Why? Because, among other things, the
handbook confidentiality provisions allegedly interfered with the organizing
and election process by chilling employees’ rights under the National Labor
Relations Act (NLRA) to discuss the terms and conditions of their employment, including


An administrative law
judge agreed with the union that the handbook language could inhibit employees from
exercising their NLRA rights. Based on this and other findings, the judge
ordered that the election be set aside.


NLRB Says Policy Illegal

Now the NLRB has agreed
that the confidentiality policy was illegal as employees could reasonably construe
that the language prohibited them from exercising their NLRA rights.
1 As a remedy, the board ordered
Longs to rescind the handbook language.


However, the board ruled
that the policy didn’t warrant setting aside the election results. That’s because
the confidentiality provisions weren’t adopted in response to the organizing
campaign, and they were never enforced. Thus, said the board, it was highly
unlikely that the policy had an impact on the election results.


Know the Law

As this case makes
clear, policies that can be construed as prohibiting employees from discussing
their pay (or other terms and conditions of employment) violate the NLRA. This
is true whether you’re a union or nonunion employer. What’s more, the
California Labor Code forbids disciplining or discharging an employee who
discloses the amount of their wages, including bonuses.


Here are four ways you
can avoid problems over employees talking about their pay:


1. Don’t discourage pay
Don’t do anything to restrict workers from sharing pay



2. Educate supervisors. Make sure supervisors
know not to warn employees to keep quiet about their wages.


3. Review your policies.
from your employee handbook any requirements for employees to maintain
confidentiality about pay.


4. 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.



1 Longs Drug Stores California,
Inc., and International Brotherhood of Teamsters, Local 439, 347 NLRB No. 45