In an attempt to prevent discord among employees, employers sometimes consider policies that prohibit employees from discussing their pay with co-workers. But, are these policies permitted? Below we discuss whether it is prohibited to ban employees from discussing their pay and some alternatives to consider.

National Labor Relations Act (NLRA):

Background:

Section 7 of the NLRA gives employees the right to act together, with or without a union, to improve wages and working conditions. Most employers are covered by the NLRA, regardless of whether they are unionized.

Policy Implications:

The National Labor Relations Board (NLRB), which enforces the NLRA, and many courts have found that policies and rules that prohibit employees from discussing their pay (or other terms and conditions of employment) violate the NLRA. Policies that are overly broad and could be reasonably construed to prohibit such discussions also violate the NLRA. Thus, employers must avoid pay confidentiality rules as well as overly broad policy provisions prohibiting discussions about wages, benefits, working conditions and other terms and conditions of employment. Review your employee handbook to ensure that your confidentiality, social media, and related policies are compliant.

Note: Some states also have enacted laws protecting employees who discuss their pay with co-workers.

Alternatives:

Instead of trying to limit pay discussions, consider taking steps to better communicate information about your company's compensation program and how employees' salaries and wages are determined. In addition, regularly assess your compensation program to ensure it is competitive, fair, and in compliance with nondiscrimination laws.

New Overtime Rules:

Update: On November 22, 2016, a federal judge blocked the Department of Labor from implementing and enforcing the final rule and related changes discussed below. Learn more.

Background:

Effective December 1, 2016, the Department of Labor (DOL)'s final overtime rules will raise the minimum salary requirement for the administrative, professional (including the salaried computer professional), and executive exemptions from $455 per week to $913 per week. If your exempt employees' salaries fall below this threshold, you will generally either have to:

• Raise their salaries to the new requirement; or
• Reclassify impacted employees as non-exempt and pay them overtime whenever they work more than 40 hours in a workweek.

Communication Guidelines:

The new rules may prompt some difficult conversations for employers. For example, if you raise the salaries of some employees to comply with the new rules, other employees may have questions about why their pay isn't increasing or why they are being reclassified as non-exempt instead. Don't try to prohibit employees from discussing these changes with co-workers (this activity is protected under the NLRA and some state laws as well). Instead, consider developing an effective communication strategy that can help employees understand the changes. Consider these guidelines:

• Use multiple channels to communicate with employees, such as email, team meetings, and one-on-one meetings.
• Explain the change, the reason (to comply with a new government rule), and the effective date.
• Explain the impact on the employee. Will the employee's pay increase, decrease, or stay the same?
• Identify who employees can go to with questions.
• Outline additional support that will be provided to employees, such as training on the company's timekeeping system for employees reclassified as non-exempt.

If an employee has questions about why you chose a particular option for him or her, consider these guidelines:

• Reiterate that the changes are necessary to comply with the law.
• Be honest that the company was faced with some difficult choices.
• Confirm that you tried to limit the impact on employees as well as the company.
• Stress that the changes aren't a reflection of a reduced status within the company.
• For reclassified employees, explain the benefits of being non-exempt, such as a potentially improved work/life balance, or overtime pay whenever they work more than 40 hours per week.

For more information, see How to Communicate Overtime Changes to Employees.

Conclusion:

The NLRA as well as some state laws prohibit employers from maintaining policies that bar employees from discussing their pay. Consider lawful alternatives, such as communicating more clearly about compensation changes and ensuring your compensation program is equitable.