Communication Rules in the Workplace: Secret Salaries?

September 13, 2007

At PayScale, workers and employees from across the country and the world share their salaries with us. We tabulate this information from our salary survey to produce information people can use to determine whether they are paid fairly. Of course, we keep identities secret, only reporting anonymous and aggregate compensation data.

However, as money.cnn.com recently reported, it can be dicey for employees in the same office to share information on salary and payment among themselves. Salary information discussions can be a touchier subject than politics or religion.

Some employment contracts even have communication rules that forbid their employees from sharing information on salary and benefits.

In this post, I’ll look at whether these are rules legal in the US, how employees go about finding salary information from their co-workers, and what the experts say about sharing information on salary and wages in the workplace, by both employees and employers.

Do You Know What You're Worth?

Here is a hint: the easy way to find out if you’re being paid what you’re worth, and avoid the office politics, is to use the PayScale salary calculator.

Career Description and Salary Information

Employment consultant Alexander Kjerulf says that keeping salary information lists “secret” actually hurts more than it helps. He says that secret salaries breed distrust among employees who may suspect they are being treated unfairly, but cannot prove it.

He also notes that secret salaries are often not that “secret,” thanks to office chatter. Kjerulf suggests that if someone discovers they are being underpaid, they cannot tell their boss that they “know for sure,” without admitting that they violated company rules by obtaining salary info.

Job Pay Scales in a Perfect World

Kjerulf argues that, if companies pay their employees what they were worth, then there would not be a need to keep salaries a secret. He says, “A company must attempt to pay each employee a fair salary, i.e., one that matches the employee’s skills, the market average and other employees inside the company. In other words, the company itself has a vested interest in keeping salaries fair, and keeping salaries secret makes that nearly impossible.”

Hmm, in a perfect world that would be ideal, but is it realistic?

Free Salary Comparision and the Law

Many businesses discourage employees from discussing salaries, usually by cloaking salary information under a company policy of “confidentiality.” However, companies cannot ban salary discussions between employees in the US, thanks to the National Labor Relations Act (NLRA).

When it comes to sharing information on salary and payment, USAToday.com reports: “The NLRA says employers cannot interfere with, restrain or coerce employees in exercising their rights under NLRA, which protects the employees’ right to discuss their ‘wages, hours, and other terms and conditions of employment’ for their ‘mutual aid or protection.’ ”

Companies have been successfully sued under the NRLA for dismissing employees for discussing salaries. Generally, employees are reinstated with back pay, and the employment rules banning salary discussions are removed.

That said, Lee Miller, co-author of A Women’s Guide to Successful Negotiating, says that not sharing salary information is expected, “It’s the unwritten law. It’s the expectation that management communicates.” Miller adds, “It’s in your best interest to keep that information to yourself. Smart people listen, but don’t talk about their own salary. Discussing compensation makes people uncomfortable because there is implied pressure for them to reciprocate by disclosing their salary.”

Salary Comparison and Psychology

While I am not a lawyer, it looks like you can legally talk about salary information at the office, but it could work against you in the arena of office politics. Certainly the company would rather you not know in most cases, and that’s understandable. From bottom-line perspective, few employees will complain if they are overpaid 🙂

There is a psychological cost of knowing what your co-workers earn. You may have to face the fact that you are not only paid less than co-workers, but also that your pay is fair. Only one person is the most productive worker for your company, and it likely isn’t you 🙂

People are generally bad at judging their own relative ability. This is so common that psychologists have given it a name, “The Lake Wobegon Effect“. This is the effect where a large majority of people put themselves in the top group in relative ability. Common cases are that 80% of people have said they are in the top 30% of drivers, 25% of high school students have said they are in the top 1% of getting along with others, etc.

Fortunately, I don’t suffer from these delusions. As an undergraduate, I was shown on a weekly basis that I was at best in the top 80% of my fellow physics students. When I got to grad. school, I dropped to the top 95% 🙂 I still think I am above average in getting along with others… my current co-workers take exception with this self-assessment 😉

Still, when the rubber meets the road, it is your responsibility to find out if you are being paid fairly; no one is going to look out for your best interests except you.

Be smart and do your salary research safely. The PayScale Salary Calculator is a quick and easy way to compare positions. When you want powerful salary data and comparisons customized for your exact position, be sure to build a complete profile by taking PayScale’s full salary survey.

Cheers,

Dr. Al Lee