When the Boss Says, 'Don't Tell Your Coworkers How Much You Get Paid'

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.
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Last fall, I became a barista in a small, “socially responsible” coffee company. A few months later, I got a temporary paralegal position at one of the world’s biggest multinational, corporate law firms.

The two companies had little in common, but both told me one thing: Don't talk to your coworkers about your pay.

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. 

“Make sure you don’t talk about your salary with anyone,” she said sweetly, as if she was giving advice to her own son. “It causes conflict and people can be let go for doing it.” (This is to the best of my recollection, not verbatim.)

It wasn’t all that surprising to hear this from a corporate HR manager. What was surprising was the déjà vu.

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.

And yet, gag rules thrive in workplaces across the country. In a report updated this year, the Institute for Women’s Policy Research found that about half of American employees in all sectors are either explicitly prohibited or strongly discouraged from discussing pay with their coworkers. In the private sector, the number is higher, at 61 percent.

This is why President Obama recently signed two executive actions addressing workplace transparency and accountability. One prohibits federal contractors from retaliating against employees who discuss their pay with one another. The other requires contractors to provide compensation data on their employees, including race and sex. But while these actions protect workers at federally contracted employers, they do not affect others.

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.

“The problem isn’t so much that the remedies are inadequate,” Becker said, “but that so few workers know their rights.” He says that even among those workers who are aware of the NLRA, many think that it protects unions but no one else. Now overseeing organizers at the AFL-CIO, Becker has found that before organizers even begin helping workers, they have to educate employees on this very basic law. “Workers call us up saying they’re unhappy and they want to organize,” Becker explains, “and when organizers look at the employee manual, sure enough, they find a policy saying that workers aren’t allowed to discuss their pay.”

Gag rules, then, are policies that flourish when employers know the law and their employees do not.

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.  

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Jonathan Timm is a writer based in Chicago.

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