Did you know it is unlawful for most companies to prohibit employees from discussing their pay with coworkers – as well as to punish or retaliate against employees who do? Here’s what you should know about pay secrecy and transparency laws.
The National Labor Relations Act of 1935 (NLRA) guaranteed the right for private sector employees to organize unions, engage in collective bargaining, and strike. As part of that right to collectively organize, this act means that employees have the right to communicate with coworkers about their wages because it falls under the right to “engage in protected, concerted activities to address or improve working conditions.” As the National Labor Relations Board notes, “It is unlawful for the employer to have a work rule, policy, or hiring agreement that prohibits employees from discussing their wages with each other or that requires you to get the employer’s permission to have such discussions.”
It is important to note that although the NLRA covers the majority of private-sector employers it doesn’t apply to federal, state, or local governments, employers who employ solely agricultural workers, or employers subject to the Railway Labor Act.
Redundancies to reduce discrimination
Despite the NLRA existing for almost 90 years, many workplaces still have formal or informal policies to discourage workers from discussing their wages. Recent research shows that the cultural taboo of discussing wages is still proving hard to kick, especially when silence regarding wages benefits the employer.
In the last decade, as discussions on gender and racial wage gaps have become more difficult for politicians to ignore, some states have begun proposing and enacting their own laws to reaffirm what is already established in the NLRA as well as to address some of its limitations. State laws can cover more employees than the NLRA, especially smaller ones, and have the ability to set their own penalties for violating the law — especially as many believe that the current penalties for violating the NLRA are not harsh enough to discourage employers from ignoring the law.
A push for pay transparency
In 2014, President Obama announced two executive actions to bring visibility to the issue of unlawful pay secrecy policies as a broader plan to fight the gender wage gap through pay transparency. Unfortunately, one of those actions was suspended by the Trump administration before it could ever fulfill its purpose.
The other executive order helped establish pay transparency regulations that went into effect in 2016 and are regulated by the Office of Federal Contract Compliance Programs. Check out this pamphlet and their FAQ page to learn more.
Since 2020, some states have taken it upon themselves to enact pay transparency laws as an additional way to address pay inequalities and wage discrimination. Currently, eight states (CO, CA, CT, NV, RI, NY, MA, and WA) have pay transparency laws that require companies to provide or publish pay rates or ranges for job postings or to candidates before compensation negotiations. An additional 15 states are currently considering establishing something similar. A federal law has also been proposed this year in the House of Representatives.
Additionally, some states have banned employers from requiring job applicants to provide prior pay history.