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Workplace ban on pay talk is under fire

Secrecy rules help keep earnings gap alive, groups say

SHARE Workplace ban on pay talk is under fire

Four years ago when Mary Craig went to work as an assistant cook at an Ohio nursing home, her new boss made an odd demand: Never discuss pay with the other help. Loose lips would cause hard feelings, the boss said.

Craig soon racked up a promotion, an Employee of the Month award, an outstanding year-end evaluation and written praise for her hard work and cooperative attitude. The nursing home, the Main Street Terrace Care Center in Lancaster, Ohio, also gave her a raise. Again, her boss told her not to discuss pay.

But Craig disobeyed those orders. The other kitchen helpers kept coming to her with their paycheck woes, and she was a sympathetic listener. One said that she was being shortchanged on overtime. Another said her hourly rate had been cut. A third woman, promised a raise when Craig was told about her own, compared notes two months later and discovered that only Craig had received an increase.

Would Craig help? "I said, 'Sure!' " Craig, now 52, recalled. She brought the complaints to the supervisor. Adjustments were made to the others' paychecks. And soon, 10 days before Christmas 1997, Craig was fired.

The job market may be extraordinarily employee-friendly these days, but that does not necessarily mean you get to tell colleagues about your pay, perks and bonuses. Some managers still warn employees not to discuss pay, under penalty of dismissal. And every so often, one makes good on the threat.

Though no one seems to track how commonplace pay-confidentiality policies are, and though many employees prefer to keep their earnings secret in any case, complaints have come about in companies of all shapes and sizes. And now working-women's groups are attacking pay-secrecy rules, arguing that they perpetuate the gap between men's and women's earnings.

"Company policies that prohibit employees from discussing their salaries with co-workers keep them in the dark" about discriminatory discrepancies, said Gail S. Shaffer, chief executive of Business and Professional Women/USA, in testimony last month before the Senate Committee on Health, Education, Labor and Pensions.

She urged the senators to support legislation, proposed in both houses of Congress, that proponents say would bring attention and add muscle to laws that already make it illegal for employers to discriminate based on gender or to fire or reprimand employees for revealing their earnings.

The gap between men's and women's earnings has narrowed consistently since the Equal Pay Act became law in 1963, but it has not disappeared. Government data for 1999 show, for example, that male nurses earn 6 percent more than female nurses and male accountants earn 37 percent more than their female counterparts.

The reasons for such disparities have been debated for years, but pay-equity advocates believe that discrimination plays a part, often hidden behind a veil of confidentiality. "We have consistently heard that many employers have rules against employees sharing salary information with each other," said Ellen J. Vargyas, legal counsel for the Equal Employment Opportunity Commission.

Ellen Bravo, co-director of 9 to 5, the National Association of Working Women, said her group has heard the same story through the hotline it runs for women with workplace problems. "We hear this from professionals as well as entry-level workers," she added.

The proposed bills would amend the 1963 statute, which currently prohibits pay differences based on sex for men and women doing similar work in the "same establishment." The amendments would allow for class-action lawsuits, with compensatory and punitive damages; eliminate the "same establishment" requirement; make it harder for employers to explain away wage differentials; direct the Labor Department to create guidelines for "comparable" jobs; and make it illegal to fire or reprimand employees for talking about pay.

Thursday, a much more limited bill was introduced by Sen. James M. Jeffords, R-Vt., chairman of the committee holding the hearings. It would prohibit employers from issuing oral or written pay-confidentiality orders and from firing workers who discuss their pay.But it does not address such contentious issues as punitive damages or comparable worth.

In fact, it is already illegal to forbid discussions of pay, under federal labor laws enacted in 1935. For 65 years, the administrative courts of the National Labor Relations Board have held in case after case that employees are free to reveal their wages to one another, and that people fired for doing so must be reinstated.

But with organized labor in a deep decline, few employees know about the labor laws anymore. And a lot of employers erroneously assume that the statutes do not apply to nonunion employees.

For many managers, including those who do not formally make pay confidential, the thought of any new law that could set off a wave of freewheeling pay discussions is disturbing. There are many valid reasons, they say, for keeping pay under wraps.

"It would create morale problems if one person were allowed to boast about their huge merit bonus," said Sally J. Scott, a partner in the Chicago law firm of Franczek Sullivan, an employment law firm that represents management.

Compensation "is treated as a trade secret," added Jay W. Waks, a management labor lawyer at Kaye, Scholer, Fierman, Hays & Handler in New York. "If a competitor finds out, it could mount a really successful hiring attack."