Pay secrecy refers to workplace policies or practices that discourage or prohibit employees from discussing their wages, benefits, or compensation with coworkers. Historically, many employers in California discouraged wage transparency to avoid workplace conflict or to maintain control over compensation decisions. However, state law now offers protections that limit or prohibit pay secrecy practices. Reach out to our Los Angeles employment lawyers for a free consultation.
Legal Protections Against Pay Secrecy in California
Several statutes and regulations ensure that workers can share wage information without fear of workplace retaliation in LA County:
- California Labor Code Section 232: This law prohibits employers from doing the following:
- Requiring an employee to refrain from disclosing the amount of their wages.
- Requiring an employee to sign a waiver or other document that prevents wage disclosure.
- Discharging, formally disciplining, or otherwise discriminating against an employee for discussing their wages.
- California Fair Pay Act (Senate Bill 358): Enacted in 2016, this legislation strengthens pay transparency by giving employees the right to:
- Discuss or inquire about their own wages or the wages of other employees.
- Aid or encourage other employees to exercise their wage rights.
- Seek legal remedies if the employer retaliates against them for engaging in wage discussions.
- National Labor Relations Act (NLRA): Although a federal law, the NLRA protects the rights of most private-sector employees to engage in “concerted activities,” including discussing wages and working conditions.
Why Pay Transparency Matters
Prohibiting pay secrecy helps address wage discrimination and promote fairness in the workplace. Transparency allows employees to identify disparities based on gender, race, or other protected characteristics and employers are more accountable for providing equitable wages. California lawmakers designed pay transparency protections to support efforts toward equal pay for equal work.
Additionally, studies cited by the Institute for Women’s Policy Research show that wage transparency reduces the gender pay gap.
Exceptions and Limitations
While employees generally have the right to discuss wages, there are a few provisions:
Confidentiality Agreements
Employers may still enforce confidentiality agreements that cover proprietary information, trade secrets, or business strategies, but these agreements cannot lawfully restrict wage discussions.
Managerial Roles
Employees in managerial or HR positions may be limited in what wage information they can share, especially if they have access to confidential payroll data as part of their job responsibilities. However, they still retain personal rights to discuss their own wages.
Unionized Workplaces
In union environments, collective bargaining agreements may establish specific protocols for wage negotiations, but they cannot strip away the legal protections guaranteed under state and federal law.
Examples of Illegal Pay Secrecy Practices
Here are common workplace actions that violate California’s pay transparency laws:
- Disciplining for Wage Discussions: An employer writes up an employee for discussing pay with a coworker.
- Banning Wage Talk in Confidentiality Agreements: A company includes a clause in its confidentiality agreement that forbids employees from discussing their wages.
- Terminating for Reporting Unequal Pay: An employee who questions pay disparities is fired for “creating conflict.”
- Stating Wage Talk Is Against Policy: A manager tells staff they cannot discuss their salaries.
- Denying Promotion Due to Wage Disclosure: An employee is passed over for a promotion after discussing wages.
Consequences for Employers Who Violate Pay Transparency Laws
Employers who violate California’s pay secrecy laws may face civil penalties, administrative complaints, and lawsuits. Employees can file complaints with the California Labor Commissioner or pursue private legal action for wrongful termination or retaliation. Potential remedies include back pay, reinstatement, compensatory damages, and legal fees.