When I was a store manager with Longs, we had a lot of discretion as to how much we could pay people, unlike today. If you had a particularly strong applicant with experience you could offer them more, and if they were doing a good job for you, you were allowed to give merit raises and/or promote them to higher paying positions.
The rule “Don’t discuss your pay with anyone else” has always been around, and I have to admit I am guilty of saying it myself, but as the article from theatlantic.com says, apparently it’s illegal to do so! My philosophy was to make sure everyone was being paid fairly, so if there was an inequity in my store for some reason (i.e. new hire making more than someone that had been there for a year) I would generally fix it so that things were right instead of just hoping the underpaid employee didn’t find out, simply because it was the right thing to do. You get what you pay for, and managers who tried to squeeze their employees for a dime here or a dime here generally were not successful. (Unfortunately in today’s world, they have no choice as raises are only given annually and solely based on performance metrics.)
So I guess the law exists for good reason, if an employee is getting underpaid they have a right to know. If someone is getting paid less for good reason (i.e. poor performance, lack of experience) it should just be explained to them as such and not just kept in the dark. Whether or not you tell them “Don’t talk about your pay” they will talk to each other and there’s nothing you can do about that. In fact, it’s against the law to tell them that in the first place. I learn something new every day.
Whether I was working as a barista or a paralegal, the story was the same: My employers wanted me to keep my mouth shut about money.
At the law firm, this warning was conveyed to me during my salary negotiation. After I had worked for three months through a temp agency, the firm offered me a spot on their payroll. Given the size and success of the firm, the starting salary seemed low.
The HR manager tried to convince me that the offer was competitive. She told me that she couldn’t offer more because it would be unfair to other paralegals. She said that if we did not agree to a salary that day, then she would have to suspend me because I would be working past the allowed temp phase. I insisted that she look into a higher offer and she agreed that we could meet again later. Before I left, she had something to add.
Just three months earlier, some of my coworkers at the coffee shop told me that our bosses, who worked in the office on salaries, and even the owner, got a higher cut of the tips than we did. One barista told me that when she complained about it, the managers reduced her hours.
When you make minimum wage and have to fight for more than 30 hours per week, tips are pretty important, so I sat down with my managers to discuss the controversy. That’s when they told me not to talk about it with the other baristas. The owner “hates it when people talk about money,” my manager added, and “would fire people for it if he could.” I sulked back to the espresso machine, making my lattes at half speed and failing to do side work.
In both workplaces, my bosses were breaking the law.
Under the National Labor Relations Act of 1935 (NLRA), all workers have the right to engage “concerted activity for mutual aid or protection” and “organize a union to negotiate with [their] employer concerning [their] wages, hours, and other terms and conditions of employment.” In six states, including my home state of Illinois, the law even more explicitly protects the rights of workers to discuss their pay.
This is true whether the employers make their threats verbally or on paper and whether the consequences are firing or merely some sort of cold shoulder from management. My managers at the coffee shop seemed to understand that they weren’t allowed to fire me solely for talking about pay, but they may not have known that it is also illegal to discourage employees from discussing their pay with each other. As NYU law professor Cynthia Estlund explained to NPR, the law “means that you and your co-workers get to talk together about things that matter to you at work.” Even “a nudge from the boss saying ‘we don’t do that around here’ … is also unlawful under the National Labor Relations Act,” Estlund added.
The bill that would cover the rest of workers is the Paycheck Fairness Act. The law would both strengthen penalties to employers who retaliate against workers for discussing pay and require employers to provide a justification for wage differentials.
These reforms are necessary to address this widespread, illegal problem that the law has failed to address for decades. Gag rules violate a fundamental labor right and allow for discriminatory pay schemes.
Given their illegality, why are gag rules so common? One answer is that the NLRA is toothless and employers know it. When employees file complaints, the National Labor Relations Board’s “remedies” are slaps on the wrist: reinstatement for wrongful termination, back-pay, and/or “informational remedies” such as “the posting of a notice by the employer promising to not violate the law.”
At the same time, ignorance of the law can just as easily fuel gag rules. Craig Becker, general counsel for the AFL-CIO, used to serve on the National Labor Relations Board. He told me that workers who called the NLRB rarely were aware that their employer’s pay secrecy policy was unlawful.
But why do employers do this in the first place? Many employers say that if workers talk to each other about pay, then tension is sure to follow. It’s understandable: If you found out that your coworker made more than you for doing the same work, then you’d probably be upset.
A study by economists David Card, Enrico Moretti, and Emmanuel Saez from Berkeley and Alexandre Mas from Princeton supports that prediction. To study the relationship between pay transparency, turnover, and workplace satisfaction, they selected a group of employees in the University of California system and showed them a website that lists the salaries of all UC employees. They found that employees who were paid above the median were unaffected by using the website, while those who were paid lower than the median became less satisfied with their work and more likely to start job hunting. This result suggests, according to the authors, that employers have an incentive to keep pay under wraps.
The limitation of this research is that it doesn’t tell us much about whether those employees’ dissatisfaction was a bad thing. While it’s possible that those employees were getting a fair wage and just felt belittled by their comparative pay, it’s also possible that they were getting stiffed.
And many workers are, in fact, getting stiffed—especially women and people of color. Recall the story of Lilly Ledbetter, the inspiration of the Lilly Ledbetter Act, which gives workers a longer period of time to file pay discrimination suits against their employer. Ledbetter was told that she would be fired if she talked about pay with her coworkers, but after nearly three decades of work with Goodyear, someone slipped her a note saying that she was underpaid.
Others have explained the pay gap by showing that women are less likely to ask for raises. True as this is, the solution isn’t as simple as telling women to speak up. Several experiments by Hannah Bowles of Harvard and Linda Babcock and Lei Lai of Carnegie Mellon University have shown that employers are more likely to penalize women than men for negotiating. This suggests that women bite their tongues to avoid being called “pushy” or “bossy,” words withparticularly negative connotations for women.
But in both the public and the private sector, union decline has shifted the balance of power toward employers in a way that can allow employers to keep wages secret and pay their workers unfairly. “Removing a key source of collective power in the vast majority of workplaces opens up space for employers to institute new wage setting practices, and pay secrecy is one of them,” Rosenfeld says. “It’s much harder to keep the books closed when you have a union arguing left and right to open them up.”
Republican lawmakers have blocked the Paycheck Fairness Act three times,claiming that it would just increase lawsuits against employers. They’ve also argued that forcing firms to share their compensation practices would hurt business. But according to Hegewisch, there’s no evidence that lawsuits have increased in states where pay transparency laws have been strengthened, and firms already share compensation information through human resources services like WorldatWork.
If the law did change, we would still face one of the biggest barriers to pay transparency: workplace culture. Even the most confident among us can melt into awkward, self-conscious messes when we have to negotiate our salaries, and asking a coworker about pay seems akin to asking about their sex life. Private companies are showing that opening up the books completely can work, while the public sector has done that for decades, yet many still fear that talking about pay would destroy our workplace collegiality.
On the day my bosses at the coffee shop told me not to talk tips, my morale hit bottom. An organization I once trusted was telling me not to ask basic questions about my compensation. Even if pay secrecy comes with good intentions, this is its unintended effect: It tells workers that their bosses have something to hide, or that they don’t have the right to get a second opinion on whether they are being treated fairly. As Craig Becker told me, “Workers can only improve their situation when they can understand their working conditions.” Deciding whether a pay scale is fair cannot be left up to the employer alone.