Iceland recently decided its laws preventing pay discrimination were insufficient. New legislation will require employers to prove that their employees are being compensated fairly. This is a significant advance. Pay secrecy gives employers the power to discriminate against workers, or to pay them based on arbitrary, opaque criteria. Forcing employers to be transparent about compensation puts Iceland at the front of the pack in protecting worker rights. In many countries, including the United States, the onus is on the employee to uncover pay discrimination, and bring about legal action to remedy the situation.Know your rights here.
The issue of pay secrecy is particularly fraught for women, who have historically been paid substantially less than men for doing the same work. This is starting to change. In an era of “lean-in” feminism, women have become familiar with research showing that Women Don’t Ask and that starting a career with a lower salary than a man in a similar position can lead to dramatic differences in compensation over the long run. These days, more and more women are asking.
In theory, the Ledbetter Act works in concert with Section 7 of the National Labor Relations Act which grants non-supervisory employees in private-sector companies the freedom to discuss their wages or salaries. Any such discussion is concerted activity, protected under the act. However, the penalties for employer violations remain woefully weak, and may disappear entirely under the current presidential administration.
Moreover, as legal scholar Cynthia Estlund argues, most workplaces have strong norms against discussing salaries, and many workers incorrectly believe that they may be punished for these discussions. For example, numerous NLRB rulings prohibit companies from putting rules in employee handbooks that flout federal protections of workers’ rights. Yet companies still do it. In 2010, an administrative law judge ruled that ten different sections of the T-Mobile employee handbooks violated federal labor law, including provisions that effectively stopped workers from discussing wages and working conditions. In this case, the company was imposing an illegal policy on over forty thousand workers, chilling their ability to organize together at the same time that the Communications Workers of America was attempting to organize a union at T-Mobile.
Some 60 percent of private-sector workers report that their employers have similar policies to T-mobile. These policies, while technically unenforceable, create a climate where workers do not discuss pay, and therefore cannot uncover any disparities. Many workers wrongly think (no doubt encouraged by their employers) that it’s against the rules to discuss their wages or salaries with their coworkers.
Requiring pay disclosure, and requiring that temp agencies disclose their billing rate to their contractors, would be a very good, but until then, know that any section of the employee manual that forbids discussion of your pay with a coworker is illegal and unenforceable.