What is Pay Secrecy?

Pay secrecy is a type of workplace policy that prohibits employees from discussing their salaries. Whether informal or formal, these policies are illegal in California, as they are typically used as an effort by an employer to conceal wage discrimination.

Is it Illegal to Discuss Wages?

The following laws protect the right of workers to discuss topics such as wages:

The National Labor Relations Act of 1935 (NLRA)

The NLRA allows most employees to discuss their salaries – even if they previously signed a nondisclosure agreement. In addition, this law bars businesses from enacting or even insinuating that there is a pay secrecy policy.

Executive Order 13665

This law, signed in 2014 by then-president Barack Obama, disallows federal contractors from retaliating against employees who ask about, talk about or reveal pay information.

The California Equal Pay Act

This piece of legislation, signed in 2015 by then-Governor Jerry Brown, underscores that employees have the absolute right to talk about their own wages or the wages of others. Payroll managers are excluded. Companies are barred from retaliating against workers who talk about their pay or encourage others to do the same.

California Labor Code in § 232

No employer may do any of the following:

• (a) Require, as a condition of employment, that an employee refrain from disclosing the amount of their wages.
• (b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of their wages.
• (c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of their wages.

Due to these laws, employers cannot retaliate or discriminate against employees for discussing their wages at work.

Benefits of Pay Transparency

Pay transparency can be a powerful tool for building trust between employers and employees, which in turn can boost productivity and engagement. Pay transparency can range from simply communicating pay practices to employees or explaining how pay is determined to publishing the salary for every position. As a result, it is believed that pay transparency can establish a culture of openness and close the gender pay gap.

Why Employers Pushed for Pay Secrecy

Employers have long pushed back against pay transparency, arguing that it will cause more workplace conflict and reduced output from employees who find they are paid below-average salaries. As a result, employees may look for employment elsewhere. Therefore, employers commonly included pay secrecy or pay confidentiality rules in employee handbooks.

Violations of NLRA’s Guidelines on Pay Secrecy

If employees are disciplined for talking about their pay, they can contact the regional NLRB office and lodge a formal complaint as an Unfair Labor Practice (ULP). The NLRB will evaluate the complaint and may open a case against the employer. If an employer is found to have violated the NLRA, they can be subject to penalties. In addition, employees who discover an inequality in pay or have suffered wrongful termination, discrimination, or another form of retaliation for talking about their pay have the right to file a lawsuit against their employer for damages.

Schedule a free consultation with an Orange County employment law attorney today.