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There Is No Future for Pay Secrecy

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By Casey C. Sullivan, Esq. on January 22, 2016 2:59 PM

Salaries and compensation used to be highly-guarded information. Employees generally didn't know what their colleagues were making or how much they earned relative to the cubicle next door.

But pay secrecy's days are numbered, given new state and federal laws, NLRB rulings, and the anonymity of the Internet.

Salary Transparency and the Law

"The legal landscape is decidedly turning towards eliminating pay secrecy," according to Sarah Moore, a partner at Fisher and Phillips. Companies need to get ahead of that "inevitable transition," she argues in Inside Counsel, in order to address "actual or perceived salary inequities."

The move towards salary transparency is being driven by a few legal developments. On the state side, California's new equal pay law prohibits employers from retaliating against employees who disclose their pay, or that of coworkers and colleagues.

California's law expands on the already recognized right of workers to discuss their own pay, which has been further strengthened by recently executive and NLRB decisions. In 2014, for example, President Obama issued an executive order prohibiting federal contractors and subcontractors from retaliation against employees who discussed compensation.

The NLRB has taken a several actions to protect employees who discuss their wages, treating it as concerted action regarding the terms and conditions of employment under Section 7 of the National Labor Relations Act. Those discussions don't have to be on the shop floor either. NLRB decisions have ruled that workers can discuss their employment conditions online, striking down restrictive corporate social media policies.

Oh, and let's not forget the required disclosures on executive pay. The SEC's new CEO pay ratio rule means that employees will soon know just how much more executives make than them, even if they don't know the salary of their immediate colleagues.

Salary Transparency and the Net

But while the law is moving slowly towards salary transparency, the Internet is already there. Websites like Glassdoor make it easy to see what colleagues are making. Glassdoor allows users to see anonymous salary and bonus information, reviews of the workplace environment, and even interviewing tips.

Other job search sites like Indeed also make it easy to see who's paying what, where.

The anonymous nature of these forums makes it even harder for companies to keep a lid on their employment details.

While there are still definite limits on employee disclosure of company information, the trend is decidedly headed towards transparency, particularly when it comes to income. For workers, that's a good thing. For corporations, it might not be as bad as you expect, so long as companies get in front of the developments and address potential pitfalls early on.

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