When Salaries Are Secret, Workers Pay

When Salaries Are Secret, Workers Pay

Many people, including me, were brought up not to talk about money.  Or at least not personal money, like how much you make, how much your bonus check amounted to.  Many companies have a rule against discussing salaries among workers, but the reason is not rooted in good breeding.  Instead, such a rule can be used to avoid paying more money to more educated employees, avoid morale issues that can arise from a sense of injustice, and avoid lawsuits in the case of true, illegal, injustice.

A new study discussed in Smart Money magazine showed that publicity on salary data made some people unhappy about their own pay, but did not contribute to a sense of superiority or happiness with the better paid employees.

As the article points out, rules outlawing employees discussing salary among themselves violates the National Labor Relations Act.  That act governs the conduct of union elections and other aspects of the unionized workplace.  But some provisions apply to all workplaces, since the law protects collective action.  When employees combine together to object to workplace treatment, Section 7 of the NLRA protects their activity from retaliation even when the workplace has no union.

Talking about salaries benefits employees, since they get a better idea of the market value of their jobs.  Almost more importantly, patterns of wage discrimination can be uncovered.  Secrecy is what stopped Lily Ledbetter from winning her case against Goodyear Tire, where she had been paid 20% less than her male counterparts for 19 years.   The Supreme Court held that she had to sue within a short time of the first decision to pay her less.  Too late for Ms. Ledbetter, the Lily Ledbetter Fair Pay Act was enacted in 2009, but it does no good if the women do not know what the men earn.

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