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.
The limitation of this research is that it doesn’t tell us much about whether those employees’ dissatisfaction was a bad thing. While it’s possible that those employees were getting a fair wage and just felt belittled by their comparative pay, it’s also possible that they were getting stiffed.