'Pay Secrecy' Policies At Work: Often Illegal, And Misunderstood President Obama has signed an order that reinforces part of a law that's existed for nearly 80 years: Employees can discuss compensation without fear of retaliation. Here's what you should know.


'Pay Secrecy' Policies At Work: Often Illegal, And Misunderstood

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Working women back here in America make less money than men. It's what's known as the wage gap. The size of that gap is a matter of some debate, but several studies over many decades have confirmed the basic points. This past week, President Obama used the power of his office to try to narrow the gap, at least for one slice of the American workforce. He picked a fight with a practice known as pay secrecy.

PRESIDENT BARACK OBAMA: First, I'm going to sign an executive order to create more pay transparency by prohibiting federal contractors from retaliating against employees who discuss their pay with each other.


VIGELAND: The hope is that if women know that their colleagues are making more for equal work, they can do something about it. This order only applies to federal contractors, but here's the thing. Under federal law, with few exceptions, you already have the right to talk about your salary. We called up Cynthia Estlund. She's a professor at New York University's School of Law, and she says employees have had this right for nearly 80 years.

CYNTHIA ESTLUND: Since 1935, the National Labor Relations Act has provided that private sector employees basically have a right to engage in concerted activity for mutual aid or protection. That's, you know, old-fashioned sounding language, maybe, but among other things it means that you and your co-workers get to talk together about things that matter to you at work.

So the National Labor Relations Board has long held that these pay secrecy policies that many employers have in writing violate the National Labor Relations Act.

VIGELAND: What if I sign a contract that has a nondisclosure agreement attached to it? Then I'm not protected, right?

ESTLUND: That's a really good example of some limitations on this policy. Employers do have some legitimate interests in confidentiality. And so trade secrets, for example, can be protected. People whose job it is to deal with other people's pay information, they can be prohibited from disclosing information. But talking about your own and your co-worker's pay among yourselves, the employer is not allowed to simply declare that to be confidential information and prohibit employees from talking about it.

VIGELAND: So in other words, HR can't go around and tell everybody what you make, but you can.

ESTLUND: Exactly.

VIGELAND: How common is it for employers to flout this law and tell employees that they can't talk about it?

ESTLUND: Well, I've seen some studies that suggest maybe 40 percent of employers actually have policies prohibiting employees from discussing each other's pay.

VIGELAND: Forty percent?

ESTLUND: Something like that. Now, I don't know for sure if that's 40 percent have it on paper because sometimes, employers have what are called pay secrecy norms. So you find if you start talking about it, you might get a nudge from the boss saying, we don't do that around here. That's also unlawful under the National Labor Relations Act.

VIGELAND: What protection do you have, then, while you are trying to fight a policy like this? I mean, if we're giving a hypothetical - say, I'm talking with my fellow employees, and my boss finds out and reprimands me. What do I do?

ESTLUND: Technically, you could go to the National Labor Relations Board, which has many regional offices throughout the country, and you can file a charge online and complain about it. Unfortunately, it doesn't cost very much to violate the NLRA, in most cases, and so employers aren't so afraid of violating it. But in principle, the fact that you can get a remedy down the line is supposed to deter the employer from engaging in this misconduct. And it's supposed to encourage employers to internalize these rules.

VIGELAND: Given that the law is already on the books and it's pretty clear-cut, why do you think the president signed this executive order this week?

ESTLUND: Well, I think, as we've discussed, the National Labor Relations Act is - it's not really well understood. People don't know much about it, and it's under-enforced. The penalties are not very serious. What this executive order does that the labor law doesn't is, it provides a potentially very scary sanction.

VIGELAND: What is that sanction?

ESTLUND: Well, it says that we don't want to deal with contractors who engage in this sort of conduct. Even a very remote threat that you lose your federal contract is a very big, you know, worry compared to the worry that sometime down the line, you might be given a slap on the wrist and told not to do this anymore. And maybe you have to reinstate someone if you fired them.

VIGELAND: Cynthia Estlund is a professor at New York University's School of Law. Professor Estlund, thank you so much for your time.

ESTLUND: Thank you.

VIGELAND: As Professor Estlund said, pay secrecy policies plainly violate federal law. But that hasn't stopped some companies from firing employees for talking about their salaries, people like Lyn Teare. Back in 2011 she was working for a civil engineering company in Houston. Teare says she had a conversation with someone who was interested in working there and they talked about salaries. Shortly thereafter, the bosses asked Teare to swing by.

LYN TEARE: The HR manager was there with her little brown envelope and they said you've discussing salaries. I said, excuse me? And, yeah, and that's not allowed.

VIGELAND: The HR Manager told Teare that salary discussions were not allowed and fired her. And at the time she didn't know the pay secrecy policy was illegal.

TEARE: Did not know that. Unh-unh.

VIGELAND: Neither did the bosses.

TEARE: This is the funniest part. They didn't even know about the law themselves.

VIGELAND: But her husband did know and so Teare called up the NLRB and filed a complaint. After about two years of legal wrangling she won her case along with a big check for back pay plus the option of getting her old job back. She didn't take them up on that last part. Regardless of the law, keeping salary information private is getting harder and harder these days, especially with websites out there like GlassDoor.com.

SCOTT DOBROSKI: So we're kind of like the Yelp for jobs and companies and this is where employees go, share information that once was deemed taboo. And it's all about workplace transparency.

VIGELAND: That's Scott Dobroski. He's a career trends analyst at GlassDoor. It's a website that collects employee reviews of companies and CEOs and invites people to post salary information anonymously for anyone and everyone to see. You guys ever hear from employers who were a little miffed at what you do and the information that you're putting out there?

DOBROSKI: Absolutely. Employers are very curious as to what is going on on GlassDoor, and actually...

VIGELAND: Very curious, that's how you put it?


DOBROSKI: Yeah, that's how I put it. Look, the truth is transparency has come a long way in six years. So when we did launch, we got the questions all the time, what is this? You're exposing my information. How dare you. I want this down. What we've seen now is employers actually understanding that, hey, this is actually where good employees, potential employees are already inherently interested and researching your company.

VIGELAND: In other words, transparency is coming even when it comes to salaries. And if employers can't beat them, they might as well join them.


VIGELAND: This is NPR News.

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