EMPLOYERS BEWARE OF THE SALARY TRAP
October 28, 2020
It has, for a long time, been common to discourage employees from discussing their compensation in the workplace. Some organizations discourage it, while others attempt to ban it outright under the threat of disciplinary action. In both cases, it is the wrong approach to what is admittedly, a tricky subject to navigate.
There are many variables that factor into employee compensation, and while an employer may have sound reasoning behind paying one employee less than another, without full context, disclosure of compensation can lead to lower morale among your workforce, infighting, and increased turnover. That being said, if any employer is telling employees they cannot discuss their salary, it is a violation of the National Labor Relations Act of 1935.
The NLRA says, in part:
“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
Discussing/comparing salaries qualifies as engaging in an activity for the purpose of mutual aid or protection, thus it is protected under the NLRA.
There is also another potential landmine for employers to be wary of when it comes to employee salaries, and this one is relatively new. On January 6, 2020, New York officially banned employers from asking prospective or current employees about their salary history. The change was introduced as an initiative aimed at closing the gender wage gap and it applies to all public and private entities that operate in New York. NY CLS Labor §194-a says, in part:
No employer shall, orally or in writing, seek, request, or require the wage or salary history from an applicant or current employee as a condition to be interviewed, or as a condition of continuing to be considered for an offer of employment, or as a condition of employment or promotion.
The penalty for violation of the new rules is also outlined:
An applicant or current or former employee aggrieved by a violation of this section may bring a civil action for compensation for any damages sustained as a result of such violation on behalf of such applicant, employee, or other persons similarly situated in any court of competent jurisdiction. The court may award injunctive relief as well as reasonable attorneys' fees to a plaintiff who prevails in a civil action brought under this paragraph.
During COVID-19, the rollout of this new law may have slipped through the cracks for some employers, so we want to make sure our clients understand their responsibilities. They include:
• Removing any salary questions from job applications.
• Educating interviewers that they can no longer ask about previous compensation during the interview process.
• If an employer utilizes the services of a hiring agency, verify that they are not inquiring about previous salary as part of the screening of potential employees on the company’s behalf.
Additionally, under the new law, employers are not permitted to seek out salary information through other methods. NY CLS Labor §194-a says, in part:
No employer shall, orally or in writing, seek, request, or require the wage or salary history of an applicant or current employee from a current or former employer, current or former employee, or agent of the applicant or current employee's current or former employer.
Employers who are concerned they may have a policy or practice that runs counter to the guidelines outlined above should give us a call. Our labor and employment team works with employers of all sizes across all industries. We don’t only help when there is trouble, we work with our clients proactively to prevent issues before they arise.
Click here to read the complete requirements under NY CLS Labor §194.
Katherine Liebner is an attorney at Gross Shuman P.C. Ms. Liebner focuses her practice in the areas of estate planning, estate and trust administration, and labor and employment law.
She is admitted to practice before all New York State Courts, Florida State Courts, and the federal district court for the Western District of New York, the Northern District of New York, and the United States Tax Court.
She can be reached at 716.854.4300 ext. 236 or [email protected]
