Can you be fired for revealing your pay?

Business, Money, Rights

Fewer things are of greater concern than one’s paycheck, especially during these times of stagnant wages.  As the Economic Policy Institute points out a wide divergence between productivity and the rising inequality of compensation, many are worried for their financial security.

So if being paid adequately is important, why be squeamish about talking with co-workers about it? Maybe because you’re afraid you might lose your job if you did?

That fear isn’t just a creation of economic anxiety; they are being told as much by their employers—50 percent in the public sector and 61 percent in the private sector, according to the Atlantic. Many other employees say that even though their employers do not explicitly demand silence, the expectation is clear: do not talk about your paycheck, or else.

You have a right to talk

Legally, employers have no right to stop people from sharing information about their compensation. It’s been the law since 1935, when the National Labor Relations Act (NLRA) acknowledged the rights of workers to unionize and encouraged collective bargaining. What has changed since is the nature of work, and perhaps with it any collective memory that employees have such rights.

Reminding working people and employers alike that federal law prohibits workplace gag rules, President Obama signed an executive order in April 2015, prohibiting federal contractors from firing people for talking about their pay with fellow employees. Given the NLRA, the order is redundant, but may nonetheless function as a welcome reminder. Honoring Equal Pay Day, the president asserted: “Pay secrecy fosters discrimination and we should not tolerate it.”

States like California have underscored these federal rights by declaring that salary information is free speech. Yet even with these legal protections, many employees are wary of disclosing their pay. The website reports over a million salary posts by its users—all anonymous.

Fear, ignorance, or what?

So why are employers trying to skirt the law? Some will tell you that if their employees exchange pay information, the workplace could no longer function; too many people would be too upset when they learn just how different paychecks can be among people with ostensibly similar responsibilities. Employers argue that such differences reflect individual skills, experience, and the needs of the company looking ahead.

Pay flexibility is part of a calculus of hiring, training, and incentives tuned to maximize productivity and profits. Pay comparisons, the argument goes, are not conducive to positive working relationships nor are they always flattering. Talking about who gets what at work is just too risky. Some firms even claim that salaries can be protected as trade secrets.

Nonetheless, the fact is that whether employers choose to recognize it or not, the lack of transparency regarding compensation can obfuscate real discrimination. President Obama’s first act as president was to sign the 2009 Lilly Ledbetter Fair Pay Act, a law made necessary by the fact that only years after working as a manager for a company that imposed a gag rule, Lilly Ledbetter received an anonymous tip that she was making substantially less than her male colleagues. Her case became a matter of federal law as the courts and Congress acted to clarify that the purpose of Title VII of the Civil Rights Act of 1964 was to encourage voluntary compliance with the principle of equal pay for equal work.

We can decry discrimination all we want, but we can’t do anything about it if we don’t communicate.

Culture of trust

Salary transparency leads to trust and workplace satisfaction. At least that’s the bet that many universities—including private schools like Columbia University and public institutions like the University of California system—have made by publishing their pay scales on their websites. Employees of these schools easily can see how their paycheck and benefits compare.

CEO Dan Price of Gravity Payments is taking the idea of open and fair wages to another level by offering a $70,000 a year salary for every employee, including himself. Many people are likely to question whether it’s necessary or useful for salaries or other forms of compensation to be the same—it will be interesting to follow how things work out over the next few years at Gravity—but one thing is clear: everyone there will have a solid sense of security and know where they stand.

Do these examples add up to a shift in workplace culture, at least in some quarters? The greatest impediment to equality in the workplace isn’t the law—it’s culture, and such bold policies can lead the way toward change.

Many employers have an acute fear that full disclosure will hurt the bottom line; a few simply want to engage in unfair compensation policies. Open communications—and an assist from the courts—can nudge both towards compliance.

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