By: Rachel Tunney
The Equal Pay Act makes it illegal for employers to pay men and women who perform the same jobs differently based on their sex. Yet, American women today still only make 80 cents for every dollar earned by their male counterparts. [1] . How can we close the gap? Simple. Let employees discuss their earnings with each other.
define for me, pay secrecy, please?
Pay secrecy policies are exactly what they sound like: policies put in place to keep (or heavily discourage) employees from discussing their wages with other co-workers. The policy could be:
- Found in writing, such as in an employee handbook;
- Verbally passed along to the newly hired when payment is discussed; or,
- Implied, such as a stern look when an employer overhears an employee discussing pay
- Part of the overall office culture (ie: “Just how it’s always been.”)
what’s the big deal?
Lack of transparency in wage earnings contributes to the wage gap between co-workers, particularly for minorities and women. Ultimately, pay discrimination goes undetected when discussions on wage earnings are banned. Employers feel less pressure to audit their pay systems when they do not have to deal with their employees knowing exactly WHO is earning WHAT. Employees instead are forced to assume they are being paid the same, or nearly the same, as their counterparts. Which is not always the case.
Even though companies that implement pay secrecy policies are violating labor laws, the reality is that these policies still exist. But employees keep quiet out of fear of retaliation by their employer. That fear forces questions to remain unanswered as employees stand silently next to an individual wondering, “What’s HER worth?”
where are you getting this information?
A 2011 survey from the Institute for Women’s Policy Research asked workers whether or not policies existed that discouraged wage discussion. Survey-takers were told to pick the statement that best characterized their workplace:
- Wage and salary information is public
- Wage and salary information can be discussed in the workplace
- Discussion of wage and salary information is discouraged by managers
- Discussion is formally prohibited and/or employees caught discussing wage and salary information could be punished
The survey found that HALF of the workers surveyed (both men and women) reported options C or D: that wage discussion amongst co-workers was either discouraged or prohibited and/or could involve some form of punishment.
okay, so these policies exist. how would the paycheck fairness act help?
The Paycheck Fairness Act, which has been placed on the Senate’s calendar, proposes amendments to employer retaliation provisions found in the Fair Labor Standards Act. The revisions would make it explicitly illegal for employers to:
“[D]ischarge or in any other manner discriminate against any employee because such employee…”
…Insert the following proposed language from the Paycheck Fairness Act:
“[I]nquired about, discussed, or disclosed the wages of the employee or another employee (such as by inquiring or discussing with the employer why the wages of the employee are set at a certain rate or salary).”
what arguments are in favor of pay secrecy policies?
Pay secrecy policies do exist for a reason. Those who agree with the implementation of these policies typically argue that:
- Knowing a co-worker’s wage can make an employee feel demoralized and not motivate them to work harder
- Most employees overemphasize their contributions and assume their wages are below what they think they should be
- Employees who discover they are underpaid become dissatisfied with their employer and are more likely to depart
As a business owner, you have to place new business concepts and proposals on a balancing scale and weigh your pros and cons. However, potentially eliminating gender inequality simply by being transparent puts significant weight on one side of that balancing scale. And your scale cannot recover from this chance of eliminating discrimination in the workplace, regardless of the arguable benefits of keeping wage earnings under wraps.
so, why else should we let employees talk about their wages?
A company allowing wage discrepancies between genders and/or races will be revealed if wage transparency is enforced. Aside from this revelation, there are other benefits to banning these secrecy policies:
- Decreased suspicion of wage differences amongst co-workers results in greater harmony as a team
- Employees are put in better positions for salary negotiations with the knowledge of what the company is paying everyone else
- Employees report increases in job satisfaction and personal motivation when company wage policies are honest
as a business owner or soon-to-be business owner, should I focus on transparency now?
Yes. Business owners shouldn’t wait to see whether the Paycheck Fairness Act will be written into law before taking steps to work on wage transparency. Here’s what you can do now:
- Draft strategies to both recognize and reward the good performance of exceptional employees while keeping other employees motivated through encouragement and feedback
- Conduct recruitment and wage audits to determine how your system is being managed
- Hesitate before accepting a pay increase proposal for one individual without considering the whole
- Review the pay ranges for your company’s industry and compare them to your own
you seem to be passionate about this. why?
Take a look at the following two employees:
Employer: Retail Company- Flagship (New York City, New York)
| Employee A | Employee B |
Opening: clean and restock bathrooms, fill and complete online orders, restock sales floor Sales: customer service, product knowledge, cashier training, front door security Back-of-House: incoming/outgoing shipment, inventory organization Visual Design: design and execute Front Feature/Window Displays Overnight Shifts (10pm-8am): 6/month
|
-Sales: customer service, product knowledge, cashier training, front door security • Overnight Shifts (10pm-8am): 0/month
|
|
Hourly Wage: $11/hr |
Hourly Wage: $15/hr |
I was Employee A.
I was explicitly told during my hiring process never to discuss hourly wages with a co-worker. It wasn’t until my last day of work that a co-worker, Employee B, revealed to me (secretly) her hourly wage. Because of the pay secrecy policy, I did not have the chance to see what my company clearly could have afforded to pay me and argue for it.
The Paycheck Fairness Act should be signed into law. Until then…
Let your employees know their worth. Transparency trumps secrecy.
Rachel Tunney, at the time of this post, is a 2L at Penn State Dickinson Law. Formerly a professional New York City dancer/singer, Rachel is now interested in pursuing a career in corporate litigation. Rachel currently serves as the Dickinson Law Student Representative for the Pennsylvania Bar Association and is an Associate Editor of the Dickinson Law Review.
Sources:
Paycheck Fairness Act, H.R. 7, 116th Cong. (2019).
29 U.S.C. § 215 (2019).
Laurence Bradford, Are Tech Companies Breaking The Law With Pay Secrecy Policies?,FORBES (Sept. 11, 2018), https://www.forbes.com/sites/laurencebradford/2018/09/11/are-tech-companies-
breaking-the-law-with-pay-secrecy-policies/#743dd9ec397d
Todd Zenger, The Case Against Pay Transparency, HARDVARD BUSINESS REVIEW, (Sept. 30, 2016), https://hbr.org/2016/09/the-case-against-pay-transparency
Ariane Hegewisch, Pay Secrecy and Wage Discrimination, INSTITUTE FOR WOMEN’S POLICY RESEARCH (June 9, 2011), https://iwpr.org/publications/pay-secrecy-and-wage- discrimination/
Employer Pay Equity Self-Audit, NATIONAL COMMITTEE ON PAY EQUITY, https://www.pay-equity.org/cando-audit.html
Tim Herrera, Why You Should Tell Your Co-Workers How Much Money You Make, THE NEW YORK TIMES (Aug. 31, 2018), https://www.nytimes.com/2018/08/31/smarter-living/pay-secrecy-national-labor-rights-act.html
Valerie Bolden-Barrett, Discouraging Employees from Discussing Pay is No Longer Just Bad Practice- It Can Lead to Legal Trouble. Why Transparency Is Replacing Pay Secrecy, ZENEFITS (Feb. 13, 2019), https://www.zenefits.com/blog/pay-secrecy-illegal-pay-transparency-on-rise/
Image Sources:
Connie Bertram, Are Pay Secrecy Policies Another Necessary Casualty in the #MeToo
Movement? WISCONSINSINJOBNETWORK.COM (April 18, 2018)
Michelle Brown, To Close the Gender Pay Gap We Need to End Pay Secrecy, THE
CONVERSATION (Sept. 15, 2014), http://theconversation.com/to-close-the-gender-pay-gap-we-need-to-end-pay-secrecy-31626
Footnote:
[1] This is just the national average. The wage gap is even more shocking in certain states. For instance, women in Louisiana, on average earn 69 cents for every dollar their male counterparts earn.
