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Can employers stop employees from revealing their pay rate?

| Apr 9, 2021 | Executive Employment

New Jersey and other states have recently passed legislation regarding the discussion of employee pay rates. While it may seem natural to talk about your pay rate with other employees, it can make some employers uncomfortable. One of the biggest areas of concern for employers is employees questioning others about their past salary histories.

The National Labor Relations Act (NLRA)

The NLRA was a large act passed by the government for the purpose of allowing pay discussion among employees for collective bargaining or similar purposes. It addressed actions that are considered illegal on the part of employers. For example, terminating an employee because he or she posted an executive compensation package on social media would be a violation of the NLRA.

The NLRA makes it illegal for employers to forbid employees from discussing their compensation packages and salaries. Employers cannot forbid this practice verbally or in written format. This is one key area for employers to keep in mind because signing a non-disclosure agreement about an employee’s salary is not considered a legal document since it would be violating that employee’s rights under the NLRA.

President Obama’s executive order

Although the NLRA covers much of the private employment sector, it excludes some other industries. These include agricultural laborers, independent contractors, and government employees. To help allow employees to better identify when unnecessary pay gaps arise, President Obama signed an executive order in 2014 that allowed federal contractors who were exempt from the NLRA to be covered under this law. More specifically, the executive order made it illegal for an employer to retaliate in any way against employees or applicants who discussed their employment compensation benefits.

While employers may have many reasons for keeping employees’ pay and benefits in secrecy, they are not legally able to do so. Employees have the right under NLRA to discuss their employment rates openly. This has allowed some employees to identify unnecessary pay gaps and bargain for higher wages.

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