Don't Ask, Don't
Tell: Pay Confidentiality in the Workplace
Sacha Cohen
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At one time, discussing your salary with colleagues
was taboo at most companies. In fact, some organizations
even developed policies explicitly banning employees
from discussing their pay. At the very least,
management strongly discouraged pay talk among
workers. However, the trend is shifting away from
outright prohibition. An online survey conducted
in March 2001 at HRnext.com
found that while a majority (51%) of respondents
reported their company had no policy about pay
confidentiality, 36% of respondents said their
companies prohibit such discussions, and 14% said
their companies have policies that say discussing
pay with a co-worker is permissible.
What many employees-or their employers-may not
know is that salary discussions among employees
are protected under the National Labor Relations
Act (NLRA, also known as the Wagner Act of 1935).
Specifically, employers cannot "interfere
with, restrain, or coerce employees in exercising
their rights under NLRA which protects the employees'
right to discuss their 'wages, hours, and other
terms and conditions of employment' for their
'mutual aid or protection'."
According to attorney Ann Kiernan, the National
Labor Relations Board has ruled for the past 25
years that employer rules forbidding workers to
discuss wages are unfair labor practices, in violation
of NLRA. Some employers may set pay confidentiality
policies in the belief that NLRA applies only
to unionized workforces. The relevant portion
of NLRA applies even to non-unionized companies,
says Kiernan. "Companies that have committed
this unfair labor practice have been ordered to
reinstate affected workers, with back pay and
attorneys' fees, as well as to rescind their rules
against wage discussions and to post a notice
to all employees telling them about the unfair
labor practice charge and its resolution,"
she says. For example, the Wall St. Journal reported
that a small bank in Cincinnati dropped its policy
against employees discussing salary when the bank's
human resource manager found out that under NLRA
the prohibition might lead to legal problems and
promptly removed the ban from the bank's employee
handbook.
How Secret Is Secret?
Whether it's in the employee manual or just a
de rigueur part of corporate culture, many companies
frown on employees talking about salaries and
raises. The problem with this hush-hush atmosphere
is that it's difficult - if not impossible - for
employees to know if any discriminatory discrepancies
exist.
Critics charge that confidentiality policies
may promote discriminatory
salary discrepancies in the workplace, making
it difficult for employees to prove that they
aren't being compensated fairly. The New York
Times cited the case of Tracy Jones, a Milwaukee
temporary employee who overheard her male colleagues
discussing their pay, which turned out to be $1.12
an hour more than she was making. After Jones
complained to her agency, a staff supervisor warned
employees that if they discussed their pay, they
would be fired. Eventually, Jones took her grievance
to the Equal Employment Opportunity Commission
(EEOC) and was fired. EEOC
eventually ruled that the temporary agency
and its parent company did engage in gender discrimination
when it paid Jones and other women less than men
doing the same job.
A Washington, DC-based Internet librarian (who
asked to remain anonymous) had a similar experience
at her former job. "I worked in a place where
a lot of people knew others' salaries. This was
due to a major amount of indiscretion on the part
of upper management and resulted in a huge morale
problem. I was humiliated when I found out that
others at my title level and experience were making
vastly higher amounts of money, and have to admit
it affected my confidence level at that job."
She says she wished that there had been policies
about discussing salaries. "If the management
had kept that information to themselves, and discouraged
discussions
they would have prevented a lot
of problems." That was a rare instance where
an employee preferred a "don't ask, don't
tell" policy, but that's hardly the norm.
While the debate rages on, there are some steps
that employees can take to make sure they are
being fairly compensated without turning to others
in the workplace for answers. This is a good reminder
to always try to negotiate
a competitive salary when you're hired. JobSpectrum
also has a list of science-related salary resources.
Stop by one of the large online salary sites such
as Salary.com
and SalaryExpert.com
for general salary information and advice.
Above Reproach
From management's viewpoint, salary discussions
can lead to morale problems. Many managers agree
that allowing employees to openly discuss their
salaries does more harm than good. As one manager
succinctly puts it, "There are two things
that can happen when [employees] discuss review
scores or salary: either they feel bad, or the
other person feels bad. Is it worth it?"
Stephanie Wilson, a partner in Reed Smith LLP's
Labor and Employment Law Group says that employers
have to be aware that salary discussions will
go on between employees and that trying to put
restrictions on those discussions isn't a good
choice. For one, she says, it's very difficult
to implement policies and even more complicated
to investigate instances of supposed wrongdoing.
The better approach, advises Wilson, is to make
sure that when you hire someone or if you are
increasing someone's salary, do your homework
and make sure you are offering a competitive salary.
"Look at education, experience, what other
people at the same level and with similar responsibilities
are making, so that if you are ever approached
with this, you have good answers formulated ahead
of time. That way, you are above reproach should
someone come to you and complain about salary
unfairness based on raced or gender."
Managers may find themselves in a sticky situation,
so to avoid this they should work with the HR
staff about salary determination. "Don't
make these decisions in a vacuum," says Wilson.
Work with your HR department, which should be
able to help you determine fair salary offers
and wage increases. "[This process] may take
longer, but it's beneficial to spend the time
up front rather than going back should someone
file a complaint. You don't want to be having
these discussions when a lawsuit hits, you want
to be able to have these discussions early on."
More Than Just Performance
Salaries always reflect more than just performance.
They also reflect whatever economic or business
pressures are present in the marketplace at a
particular point in time. For example in a tight
labor market, a company has to strike a balance
between external market value and internal equity;
this is why a new employee recruited from the
outside with particularly valuable skills may
earn more than employees who have a longer tenure
in the same department. But when inequities in
the pay system are exposed, morale is affected,
personal privacy issues are raised, and once that
information gets outside the company, desirable
employees are susceptible to poaching by competitors.
As a recent article in the Harvard Business Review
noted, "The problem isn't the disparities
that aren't justified; it's the ones that are."
The presence of online salary surveys makes it
difficult to try to maintain salary secrecy. A
company's best strategy is to educate employees
about its compensation system, including salary
ranges for all jobs. If employees know why they
earn what they do and what they have to do to
make more, knowing what others make is less important
and puts employees in charge of their own futures.
Sacha Cohen is a Washington-based business and
technology writer. Her work has appeared in The
Washington Post, Kiplinger.com, Fast Company,
Oxygen's ka-Ching and other print and online publications.
Cohen has been covering Internet trends and culture
since 1996.
Related Reading
Employers
Ease Bans on Questions About Pay - From CareerJournal.com,
companies used to reprimand employees for violating
formal or informal bans on discussing salaries.
Now, things have changed.
John Case, "When Salaries Aren't Secret",
Harvard Business Review, pp. 37-49, May 2001.
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