How many businesses have a policy like the one below?

Confidentiality of Salary and Benefit Information

Employees are prohibited from discussing their salary or wage levels and company benefits with other employees. Such information is confidential and may not be discussed in the workplace. Any employee violating this policy will be considered to have committed a breach of confidentiality and will be subject to disciplinary action, up to and possibly including termination of employment.

Look familiar? Chances are good that most companies have either a formal policy similar to the one above, or else have a tradition or practice of responding to pay and benefit discussions with disciplinary action. Those same companies would likely be surprised to learn that such policies generally violate federal labor law. Indeed, the National Labor Relations Act contains a provision, Section 7 (29 U.S.C. § 157), that gives all employees the right to "engage in concerted activities", including the right to discuss their terms and conditions of employment with each other. Section 8(a)(1) of the NLRA (29 U.S.C. § 158(a)(1)) makes it an unfair labor practice for an employer to deny or limit the Section 7 rights of employees. Based upon those two provisions, the National Labor Relations Board (NLRB) has taken the position for decades now that employers may not prohibit employees from discussing their pay and benefits, and that any attempts to do so actually violate the NLRA. Courts have basically uniformly supported that position. Moreover, those particular sections of the NLRA apply to both union and non-union employees, so there is no exception made for companies where the employees are non-unionized.

Despite the seeming inflexibility of the NLRB's position regarding policies against pay and benefit discussions, there are some limits, as explained below.

One limit involves the manner in which employees exercise their rights to discuss wages or benefits. The law entitles employees to have such discussions, but does not require employers to allow employees to do so during times they are supposed to be working. However, singling pay discussions out for prohibition, while allowing other types of conversations unrelated to work, might be evidence of intent to violate employees' Section 7 rights, so employers should be careful in that regard.

Another limit would concern the content of such discussions. Certain employees may have benefits that could potentially involve privacy issues under other laws, such as the ADA or HIPAA. Discussing such benefits in a way that involves releasing information that should be confidential under such laws, particularly in the case of two employees talking about an uninvolved third party's medical conditions, could potentially lose the gossiping employees the protection otherwise afforded under the NLRA. The NLRB would consider whether employees were on notice that releasing such information violates company policy and the law, and also the extent to which the employer actually keeps such information confidential.

Finally, it is clear that it makes a difference under the law as to how employees obtain the salary and benefit information they are discussing. Employees discussing their own information are protected, as are employees discussing the pay and benefits of others if they obtained that information through ordinary conversations with others. However, if in order to get the pay and benefit information they discuss with others, they access offices or files known to be off-limits to them, or cause others to break access restrictions and give them confidential information, and the company has clearly taken steps to restrict the information and uphold its confidentiality, then they may well find themselves unprotected by the NLRA if they are disciplined, even discharged, for participating in the access violation. A major case on point is that of N.L.R.B. v. Brookshire Grocery Co., 919 F.2d 359 (5th Cir. 1990).

Practical Tips

As an alternative to flatly prohibiting employees from discussing their pay and benefits, consider the following:

  1. In the context of a general discussion about the importance of devoting oneself to work during work hours, counsel employees that it is all right to discuss various things at work (keep it general - do not single out pay and benefits as topics), but that as in most things, moderation usually works best, and there is a fine line between being informative or conversational and being a busybody, a time-waster, or perceived as self-important. In discussing such a thing, take care not to do it in a threatening manner, such as implying that anyone who talks too much about their job conditions will be shunned by coworkers. That could easily be perceived as promoting a chilling effect on employees exercising their Section 7 rights.

  2. Do not be afraid to promote what is right in your company. Make it easy for employees to know that your pay and benefit practices are competitive with other companies within your industry, and promote your company's practices regarding advancement opportunities, merit increases in pay, and open-door policies. The more that employees know where they stand, and the more they feel that they have a stake in the company and its success, the less need they will feel to spend time talking about their pay and benefits.

Use Caution!

Many employers use sample policies that they have found on the Internet or in collections of policies in popular office software, and some employers simply draft their own policies. With some areas of employee relations, that can work. Concerning pay and benefit discussion policies, though, it is not a good idea at all to "roll your own". This area of the law is so little-known by most employers and employees and so fraught with potential problems that any employer considering writing or enforcement of a policy restricting discussion of pay and benefits should definitely consult an employment law specialist who is knowledgeable about NLRA issues before taking any actions.

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