A recent ruling by the Ninth Circuit Court of Appeals (which has jurisdiction over Arizona) emphasizes the serious risk for employers who prohibit workers from discussing their wages, benefits, and other compensation with each other, and who discipline workers for violating such prohibitions.
The National Labor Relations Act
The National Labor Relations Act (NLRA) is the basic federal law that gives covered workers the legal right to engage in “concerted activity” for “their mutual aid and protection,” to form unions, and to bargain collectively with their employers over the terms and conditions of their employment (known as “Section 7 rights”). The NLRA also makes it unlawful for employers to retaliate or discriminate against workers on the basis of their exercise of protected Section 7 rights.
The National Labor Relations Board is the federal agency that enforces the NLRA. The NLRB has long taken the position that “Section 7 rights” include the right of covered workers to discuss their wages, benefits, and other compensation with each other. The NLRB’s rationale is that such discussions can constitute “concerted activity” by the workers for “their mutual aid and protection.” The NLRB’s position, therefore, is that employers who prohibit discussions about wages or other terms of compensation, or who take any adverse action against workers who engage in such discussions, are violating the law.
Ninth Circuit Case
The Ninth Circuit case (NLRB v. North Mountain Foothills Apartments) arose when a maintenance worker at an apartment complex in Phoenix discussed his hourly wage rate and other aspects of his compensation with various coworkers. When word of those discussions got back to management, the worker’s supervisors called him in and said that disclosing his wages and benefits to the other workers had created a “hornet’s nest,” that it was a “crisis situation,” and that they had to do “damage control.” They also felt that the worker had damaged “trust and confidentiality.” The worker was fired two days later.
The worker filed a charge with the NLRB, alleging that the employer had unlawfully retaliated against him for engaging in protected concerted activity. The NLRB found in his favor, and ordered the employer to reinstate him with full back pay. The NLRB then petitioned the Ninth Circuit to enforce its reinstatement order.
The Ninth Circuit sided with the NLRB. The Court ruled that workers who discuss their wages and other compensation between themselves are indeed engaging in “concerted activity” for “their mutual aid and protection,” and that Section 7 of the NLRA therefore gives them the right to participate in such discussions. The Court also concluded that the evidence supported the NLRB’s finding that the employer had discharged the worker in retaliation for those discussions, in violation of the NLRA. On those bases, the Court affirmed the NLRB’s reinstatement and back pay order.
Key Takeaways For Employers
First, it is important to note that the National Labor Relations Act protects the rights of union and non‑union workers. Even non‑union workers, that is, have Section 7 rights under the NLRA, including the right to discuss the terms and conditions of their employment with each other.
Many employers, of course, maintain “confidentiality” policies and rules that prohibit workers from disclosing a variety of internal information. The NLRB’s position is that confidentiality rules that prohibit disclosure of truly proprietary information (internal operational information, trade secrets, and the like) are permissible. The NLRB also has stated that employers may prohibit the disclosure of customers’ or clients’ private information. But the NLRB is alert for “confidentiality” policies or practices (written or unwritten) that go further and that prohibit workers from discussing their own terms and conditions of employment, including their own wages and other compensation. The NLRB has made it clear that such policies and practices violate workers’ Section 7 rights to “engage in concerted activity for their mutual aid and protection,” and that employers who enforce such rules by disciplining or discharging workers are violating the NLRA.
The Ninth Circuit case highlights the importance of being aware of those limitations on workplace rules concerning “confidentiality.” Employers should review their written policy manuals and employee handbooks, if any, to ensure that those documents do not contain any “confidentiality” rules that go too far by prohibiting workers from discussing their own wages and other compensation with each other. Employers who do have written confidentiality policies also should consider adding language to those policies confirming that they will not be applied in a manner that would violate any workers’ Section 7 rights. And employers must refrain from discharging or otherwise disciplining any worker on the basis of his or her violation of any rule prohibiting workers from discussing their own wages and other compensation.
We encourage employers who have specific questions about work rules prohibiting employee discussions of their wages and other terms of compensation (or any other employment law topics) to contact the author or any member of Gallagher & Kennedy’s Employment & Labor Law practice.
about the author
Don Johnsen represents employers in matters involving employment discrimination and sexual harassment, wrongful discharge, breach of contract, wage and hour disputes, arbitrations, and labor practice charges. Practicing employment and labor law exclusively, Don advises on employee hiring, discipline and discharge procedures, drug and alcohol testing, non-competition matters, labor relations issues, and other employment-related policies and procedures.