Does Your Compensation Policy Violate NLRA?

Unless you've been living under a rock, you've probably heard about the goings-on over at the National Labor Relations Board over social media policies. But you probably didn't know that your compensation policy may violate the National Labor Relations Act...

We've all seen tons of policies like this:

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 possible including termination of employment. 

Having a policy like this likely violates Section 7 of the National Labor Relations Act, which gives all employees the right to "engage in concerted activities". This includes the right to discuss the terms and conditions of employment with each other. Section 8 of the NLRA prohibits employers from denying or limiting the Section 7 rights of employees.

According to the Texas Workforce Commission, the NLRB has taken the position (for quite a while!) that employer's can't prohibit employees from talking about their pay and benefits, and courts have basically supported this position.

One other thing you might not know - Sections 7 and 8 of the National Labor Relations Act apply to both union and non-union employees. So don't think you're off the hook if your workforce is non-unionized.

Are there any limits to the NLRB's rule over social media compensation policies? Yes. In a nutshell, the following three things matter:

• timing of the conversation;
• content of the conversation;
• how the information was obtained.

While the NLRA entitles employees to have conversations about pay and benefits, it doesn't say anything about when they're allowed to have those conversations. Employers can prohibit employees from discussing pay and benefits during the times they are supposed to be working. But keep in mind that prohibiting compensation discussions during work hours but allowing other types of conversation could be seen as intent to violate employees' rights under Section 7. So be careful what kinds of conversations you allow and what kinds you prohibit.

The content of the discussion also matters. Some employees may have benefits that potentially involve privacy issues under other laws like the Americans with Disabilities Act, HIPAA, and the Genetic Information Nondiscrimination Act. If the conversation releases information that is considered confidential under these laws - and especially if two employees are talking about an uninvolved third party's medical conditions - the employees could lose NLRA protections. In this case, the NLRB would consider whether the employees knew that releasing this kind of information violated company policy and the law, and what measures the employer had in place to keep that information confidential.

It absolutely matters how the employee(s) obtained the information they're talking about. It's okay for employees to discuss their own pay and benefits. It's even okay to talk about the pay and benefits of others, as long as that information was obtained through ordinary conversations. What's not okay is talking about pay and benefits information that was obtained by breaking access restrictions - like accessing electronic and hard-copy files that employees know is off-limits to them. 

The bottom line? You can't stop your employees from talking about pay and benefits. Even if you could, you probably shouldn't. Use it as an opportunity to get them talking about the right things - how competitive your pay practices are within your industry, your policies regarding advancement opportunities, the transparency of your compensation program, and how they are rewarded for contributing to the overall enterprise goals.

Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert quantitative analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics and is the host of The Proactive Employer. Follow her on Twitter at proactivemployr. 

Comments

[E. James (Jim) Brennan]

Timely reminder, Stephanie! Since NLRB has its own judicial system with administrative law judges to protect modern social media forums, traditional legal defensive tactics may be useless. Any group complaint is potentially eligible for automatic NLRB protection.

[John A Bushfield]

All the more reason for Compensation to come out of the closet! Employers hide compensation data because they:
1)don't have a well thought out and articulated Compensation philosophy; 2)can't justify (or don't think they need to) their comp practices, since in many cases comp and performance are unrelated.

I'm an advocate of total transparency with regard to comp practices, which frankly I believe is inevitable if companies want to retain their best and brightest employees in the 21st century.