Can your employees discuss their salaries or wages with their co-workers? Yes. Even if you have a company policy against it? Yes.
In fact, having a policy against it could get you in hot water with the National Labor Relations Board (NLRB) because such policies generally violate federal labor law.
The National Labor Relations Act protects employees’ rights to discuss conditions of employment, such as safety and pay even if you’re a non-union employer. The NLRB calls these discussions “protected concerted activity” and defines them as when employees “take action for their mutual aid or protection regarding terms and conditions of employment.”
For example, the NLRB issued a complaint against a diaper supply company in St. Louis that fired a worker after she discussed wages with another employee. The employer had a handbook policy against discussing wages, but it was found to be unlawful by the NLRB. As a result, the employee was given back pay and offered reinstatement, and the employer changed its handbook.
This case illustrates a common misconception — that employers can forbid employees from discussing their salaries.
Repercussions from these kinds of conversations can ripple throughout the entire company. The more you know about what you can and can’t do, the better you can protect yourself and your company.
What employers can’t do
You cannot forbid employees – either verbally or in written policy – from discussing salaries or other job conditions among themselves.
Discussing salaries is protected regardless of whether employees are talking to each other in person or through social media.
What employers can do
Of course, discussing salaries can be problematic. Conversations can evoke feelings of jealousy and inequity among co-workers who most likely are unaware of the reasons for salary differences, including education, experience and training. Suspicion, distrust and other negative emotions often result from salary discussions and seriously affect company morale.
The best way to head off those problems is to foster a positive working relationship with your employees. Consider instituting strategies like these:
- Pay people fairly in the first place: Review your own records and make sure your salaries are competitive in the marketplace.
- Encourage a workplace where employees are comfortable approaching management or HR personnel with questions or observations about salaries or working conditions.
- Help employees understand their salary ranges and job potential, and inform them how additional skills, training or certifications could possibly affect their growth within your company.
- Provide resources and training for management so they are aware of labor rulings and know how to respond to employees’ questions and requests.
- Put together a complaint resolution procedure for your company that allows employees to be heard.
- Conduct internal surveys that monitor your company’s general climate, employee engagement and compensation perceptions.
Have a compensation strategy
To help give a framework to your employee compensation, your company should detail how pay decisions are made. Having a system of checks and balances can help keep wages in line with your company policies, job descriptions and industry standards.
If you discover there are employees with salary rates disproportionate with your policy or the market, it could be seen by employees as unfair. Sometimes positions have a significant strategic importance and the pay rate can be defended as acceptable. However, these inconsistencies should be documented as part of a pay structure analysis. It’s easier to defend a claim of unequal pay if you have objective criteria for how you base your pay decisions.
You may want to hire a third-party vendor to conduct a salary survey, which analyzes data based on a job description, experience, education and geography. It will give you similar jobs in the market and the pay scale – a place to start when determining what you’ll pay your employees. Repeat the salary surveys periodically to check that your wages are still in line with industry standards.
When determining compensation, there are a number of variables to consider. It can be based on many things:
- Base salary
- Merit increases
- Shifts or hours at work
- Specialized skill sets
Pay equity is a hot topic and is driving some companies to be more transparent in their compensation, from posting pay ranges (minimum to maximum) to indicating pay grades (without discussing exact figures) for jobs. Being transparent can help remove mystery regarding wage decisions and improve employee trust in management and morale.
Guidance for hiring managers
Once you determine how and what you’re going to pay employees for specific work, that information should be documented and used by hiring managers. While you want to empower them to weigh in on salary decisions, those decisions can’t be made in a bubble. There should be a layer of approval. If the salary will deviate from your policy, document the reasons for the exception, and have someone up the chain review and sign off on it.
Some states and cities across the country have laws in place that prohibit asking a job candidate about salary history. The thought is that your company should pay workers based on your formal compensation strategy, not their pay history. By relying on your company’s pay rates as the guide, it creates a more equitable pay structure.
How your HR staff can help
When an employee brings up the question of pay, consider bringing in your HR staff, which should be equipped to ask more questions and find out what an employee’s actual concerns are. It could be something other than just a matter of pay rate.
It could be a personal problem: For example, an employee’s spouse has lost a job and they’re in a bind and need more money. It could be a matter of an employee hearing that others are getting paid more, and the issue of gender inequality could enter the discussion. Having human resources involved sends a message to the employee that their concerns are taken seriously, and takes into consideration that additional employee assistance and support may be needed.
If you’re like most companies, your employees are the backbone of your organization. Mutual trust and the feeling of being valued can go a long way in heading off problems before they escalate. With the guidance of your HR representatives and management, you should be able to handle whatever issue comes along.
How can you get the scoop on employment laws that apply to your business? Download our free e-book, Employment law: Are you putting your business at risk?