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Prohibiting employee discussions about pay

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Employers often seek to discourage conversations between employees about pay and compensation due to the distraction and potential morale issues that arise when such information is the subject of gossip and speculation in the workplace. Moreover, pay information is generally considered confidential personnel information that employers should protect as private. However, employers must beware of implementing or enforcing any policy that prohibits employees from disclosing their own pay, or discussing co-workers’ pay, as such practices can run afoul of both California and federal law. Specifically:

  • California Labor Code section 232 states that an employer may not require that an employee refrain from disclosing the amount of his or her wages, or to discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.
  • More recently, as part of California’s equal pay law, Labor Code section 1197.5 substantially expanded on Labor Code section 232 by stating that an employer may not prohibit an employee from disclosing their own wages, discussing the wages of others or inquiring about another employee’s wages. However, Section 1197.5 does not create any obligation by anyone to disclose wages.
  • Under the National Labor Relations Act, covered employers, which include employers in non-unionized workplaces, are prohibited from preventing employees from discussing working conditions, which includes issues related to pay concerns of a group of employees or potential pay inequities between employees.

Notwithstanding the above, employers may still prohibit employees from disclosing the pay of co-workers if their only source of such confidential information is through special access they have under a duty to retain the privacy of that information. For example, an employee may discuss the wages of a co-worker if that co-worker disclosed their wages in the course of a discussion comparing pay raises implemented for their department. However, an employee who holds the position of payroll clerk may not unilaterally disclose a co-worker’s pay if the only way that payroll clerk knows if the pay information is through the Company’s private payroll records. In addition, employers may restrict conversations about pay issues if such conversations occur while the employees are on duty and the conversation is interrupting the performance of their work. However, this can get tricky if the employer is singling-out this one topic of conversation and does not restrict other non-work related conversation by employees on duty. As such, Employers should train management and supervisory employees to be cautious about prohibiting employee discussions related to pay and general working conditions, and review policies that could likewise infringe on those rights.