From an employer perspective, preventing employees from discussing wages and compensation with one another may be in the best interests of the business. To protect these interests and prevent conflict in the workplace some employers may implement pay secrecy policies. These policies, often found in employee handbooks, prohibit employees from discussing salaries, bonuses, benefits, and other aspects of compensation with co-workers. What many employers do not know, however, is that by enacting and enforcing such policies, they are at risk of violating federal law; more specifically, the National Labor Relations Act (“NLRA”).
What is the NLRA?
Enacted in 1935, the NLRA is a federal law which protects various employee rights, encourages collective bargaining, and restricts certain private labor and management practices that harm the general welfare of the labor force and economy. One of the employee rights protected by Section 7 of the NLRA is the right to engage in concerted activities to address or improve working conditions, which includes the right to discuss wages with co-workers. Such concerted activity, however, must be used for the “mutual aid or protection regarding terms and conditions of employment.” In other words, if the employee is not discussing wages as a means to gain useful information, the NLRA may not apply.
Employers are prohibited from interfering with, restraining, or coercing employees in the exercise of the rights guaranteed in Section 7 of the Act. Violation of the NLRA may result in the employer paying back wages, rehiring fired employees due to violating illegal pay secrecy policies, and rescinding such policies.
Who is Covered by the NLRA?
The NLRA applies to private employees. As such, individuals employed by federal, state, or local governments typically are not covered.
The NLRA does not protect the following individuals:
- Agricultural laborers;
- Domestic service employees of any person or family in a home;
- Those employed by a parent or spouse;
- Independent contractors;
- Those employed by an employer subject to the Railway Labor Act; and
- Those employed by anyone not considered an “employer” as defined by the NLRA.
What Does This Mean For Employers?
If your employees want to discuss their wages and compensation amongst one another: let them. Do not attempt to suppress their rights by enforcing pay secrecy policies in your employee handbooks, as doing so may impose severe legal consequences.
For more information on the NLRA and concerted activity, please contact York Bowman Law, LLC.