Is there any concern with stating in a national bonus plan that “plan participation and incentive awards are considered personal and confidential” given some state legislation that employees can talk about their pay openly?
 |
Thank you for your inquiry regarding confidentiality language in an employee bonus plan.
As you are aware, several states have wage transparency laws that prohibit employers from retaliating against employees from sharing, discussing, or inquiring about wage information.
However, federal law also protects employees’ rights to engage in “concerted activity” with respect to the terms and conditions of their employment – this protected activity includes discussion of wages.
Specifically, section 7 of the National Labor Relations Act (NLRA), which applies to both union and nonunion workplaces, protects these employee rights. But, even further, NLRA section 8(a) makes it an unfair labor practice for an employer to “interfere with, restrain, or coerce” employees with regard to their Section 7 rights. This means that, even if the employer does not actively enforce its confidentiality policy and/or does not retaliate against or otherwise punish employees for discussing their wages, merely adopting a wage confidentiality policy can violate the NLRA.
The National Labor Relations Board, the agency that enforces the NLRA, interprets these rights very broadly and has struck down numerous employer policies that were found to “chill” employees’ protected activity. In other words, the Board determines whether employees would, when presented with the policy, reasonably construe it to prohibit or restrict them from engaging in the activity protected by the law.
In a recent guidance memo, NLRB General Counsel Griffin specifically addressed employer confidentiality policies, noting that “an employer’s confidentiality policy that either specifically prohibits employee discussions of terms and conditions of employment—such as wages, hours, or workplace complaints—or that employees would reasonably understand to prohibit such discussions violates the Act.”
With these details in mind, including a confidentiality statement in your company’s bonus plan could certainly be problematic, particularly if the language used could be reasonably construed to prohibit employees from freely discussing the terms of their employment, including their wages and other compensation.
When reviewing your bonus plan, first consider the purpose for the confidentiality statement. If the intent is to prevent employees from discussing their own bonuses with other employees, then the statement is best removed from the bonus plan entirely.
However, if the intent is to prevent employees with access to sensitive employee information (financial workers, human resources, management, for example) from revealing other employees’ bonus information, then this policy may be able to be saved with clear and careful drafting and a specific disclaimer statement that the policy is not intended to interfere with employees’ rights, as protected by federal and applicable state law, to discuss their own compensation.
Similarly, if the intent is to prevent employees from sharing compensation information with competitors then, again, this policy may be able to be saved with careful drafting that specifically explains this purposes and a disclaimer statement.
If you wish to retain the confidentiality language for either of these, or other similar reasons, we highly recommend having the policy reviewed by qualified employment counsel in your area.
Finally, for additional guidance, you may find this two-part article, which further discusses the guidance memo mentioned above, helpful.