Can you forbid employees from discussing pay at work?
In a word: No.
Many employers actively discourage employees from discussing pay and benefits with other employees. Some employee handbooks explicitly forbid discussing salary at work.
But know that if you create a similar policy, you can’t enforce it.
The National Labor Relations Act protects your employees’ rights to discuss conditions of employment like pay, work hours, safety, and so on. The National Labor Relations Board (NLRB) considers conversations that help employees “take action for their mutual aid or protection regarding terms and conditions of employment” to be “protected concerted activity.”
In short, the NLRB favors transparency: Disciplining or firing employees for discussing salary at work is unlawful.
Legalities aside, why would you?
Telling your employees they shouldn’t be discussing pay at work only serves to imply you have something to hide, or that you can’t justify your decisions regarding pay, benefits, and rewards.
Not only is forbidding discussions about “work conditions” against the law, it also sets the wrong tone and fosters a culture of secrecy instead of trust and transparency.
So what can you do?
Be upfront about compensation
One-off decisions are hard to explain and even harder to justify—especially where employee pay is concerned. While I didn’t love that seniority was the primary compensation driver, at least I understood how compensation was determined.
That’s why many companies openly share how they determine pay rates. Some, like Buffer, the social media management company, provide a calculator that shows how employee salaries are determined. Existing employees can use it, and candidates can also calculate what they would make if they joined the company.
The Buffer salary formula factors in job type, experience, seniority, and location (Buffer employees work remotely) to determine final rates of pay. While some team members may not agree with the formula, they’ll be able to see how their salary and their co-workers’ salaries were determined.
Outlining the decision-making process outright eliminates all the water cooler chats and gossip a strongly worded but unenforceable policy hopes to avoid.
While you don’t have to create a calculator, you should have a system in place to objectively determine starting pay as well as your process for raises and promotions.
Whether it’s skill, experience, credentials, performance, or seniority, decide which factors drive the results you want to see and create a compensation framework that works for your business.
And then follow it. For one thing, adopting objective criteria for making pay decisions will help you defend yourself against unequal pay claims.
But more importantly, you’ll be much better prepared when an employee gets frustrated by what they perceive as unequal pay.
What to do when employees have questions about team pay
Small business employees are smart. They know your business has financial constraints, that competition is stiff, and revenue is rarely stable.
They understand why you might not be able to pay market-leading salaries.
But what they will never understand is feeling unfairly compensated compared to other employees in similar positions.
When that happens—or when an employee thinks that is happening—you might face an awkward conversation.
Here’s what you can do if an employee comes to you with questions:
1. Be as prepared as possible
Review how their pay was calculated, your pay practices, and the employee’s recent performance and career goals. Get your ducks in a row so the conversation can be as logical, reasonable, and fact-based as possible. When you have difficult conversations with employees, emotion is never your friend.
2. Don’t compare employees
Evaluate the employee’s pay and performance (if the subject comes up) in comparison to company pay practices, standards, goals, and targets.
As I did, the employee may want to compare their salary. Avoid direct comparisons. Focus on how your pay policies relate to the employee.
3. Detail a path to a higher salary
Ultimately, your employee wants to earn more. Unless you made a mistake in determining their compensation, agreeing to a raise on the spot—especially if the employee is threatening to leave—implies you paid the individual unfairly in the past.
Instead, describe how the employee can earn more in the future through increased performance, taking on more responsibility, gaining additional skills, or assuming a leadership role.
4. If you can’t afford to pay the employee more, say so.
Be empathetic, but don’t apologize. Explain why. Use facts, figures, and logic to help the employee understand.
Lay out what you’re trying to achieve, what you hope and plan for your business, and how that will impact your employees.
Be genuine and transparent. Most employees will understand.
And just as importantly, they will walk away feeling a part of something bigger than themselves.
Happy, engaged employees work for more than “just” money. They feel a sense of meaning and belonging.
We all work for a paycheck, but we all want to work for more than just a paycheck.
Be open to having tough conversations about pay, and you’ll help your employees feel like they matter.
Not just to your business, but also to you.
Quick note: This is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.
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