Money talks – (And so do employees)

Way back in 1995, when I was just 15 years old, I got my first job as a part-time associate in the music department of a big box electronics store. Hootie and the Blowfish sat at Number One on the album charts and my starting wage was a cool $5.00 per hour, seventy-five cents above the federal minimum wage at the time.

As you can imagine, I was feeling pretty good about myself and my improved financial situation.  However, my feelings of affluence and opulence came crashing down when a co-worker casually mentioned that he was making $5.15 per hour.  Sure, he was more experienced and had previously held a job at the local frozen yogurt shop, but I was still angry. We did the exact same job, worked basically the same hours and, unlike him, I actually knew the difference between the Counting Crows, the Black Crowes and Sheryl Crow. In fact, I was so angry about the pay discrepancy that during my next shift, I marched down to the store manager’s office, banged on her door and demanded an immediate raise.

Just kidding. The truth is that I did absolutely nothing about it at all.

Like many, I was under the false impression back then that my wage rate was “strictly confidential” and was terrified that I would be fired on the spot if my boss found out that I had been talking about my wages with others.

Of course, I was wrong. If only I had been a regular reader of the “Employer Handbook” column back then — although that could cause an unrepairable tear in the space-time continuum.

So, let’s talk about talking about money. There are more rules than you might think on the issue and new laws are being passed on the issue regularly.  In general, employees are obtaining more protections to allow them to discuss the topic and employers are facing more and more restrictions on discussing it.

Let’s start with employee-to-employee discussions. Under both federal and New York law, employers generally cannot prohibit their employees from discussing their wages. The federal law comes from the National Labor Relations Act, which gives the right to non-supervisory employees to engage in “concerted activity,” which is essentially when employees take action to improve their working conditions. Courts and the National Labor Relations Board have consistently held (even back in 1995) that talking about wages is protected “concerted activity” and that employers cannot discipline employees simply for doing so.

A few years ago, in an effort to address gender-based pay inequality, New York passed its own law, which made this prohibition even more explicit. Pursuant to NYS Labor Law § 194(4), “no employer shall prohibit an employee from inquiring about, discussing, or disclosing the wages of such employee to another employee.” There are some limited exceptions to this prohibition, for example, employees with access to other employees’ wage information may be prohibited from sharing that information, but the general principle is clear: employees can discuss their pay with one another, and employers cannot discipline them for doing so. Based on this, I strongly recommend employers review their policies and confidentiality agreements to ensure they don’t include language prohibiting employees from talking about pay or defining “your salary” as confidential information.

While employees are generally free to ask others about their wage rates, employers are more restricted. Under the recently adopted New York Labor Law § 194-a, employers in New York are prohibited from asking applicants (including internal employee applicants) any information concerning their “salary history information,” including information about past wages, salaries, and benefits. This law, which is also intended to address pay inequality, means that employers should not include any questions on job applications or in interviews about an applicant’s current or past salary history.

Even if an applicant voluntarily discloses their pay history (for example, to negotiate a higher starting salary), employers need to be very careful about how they use that information.  Paying some employees more based on a voluntary disclosure could result in a pay equity claim from other employees who did not disclose or negotiate.

In a recent trend, some states and localities are now requiring employers to disclose salary information in job postings. Under a recent New York City ordinance, which takes effect on November 1, 2022, most postings and advertisements for jobs that will be performed at least in part within the city must include the expected salary/wage range for the position.  For example, a job posting might state, “The expected salary range for this position is between $65,000 and $75,000.”  Colorado has had a similar law on its books since 2021 and one will take effect in Washington State on January 1, 2023.  California and Maryland have passed laws requiring that employers provide salary information to applicants who request it.

Not to be outdone, the New York State Assembly and Senate each recently voted in favor of a pay transparency law that would apply to most employers across the state. Under the proposed law, covered employers would be required to disclose the (i) actual salary, (ii) minimum and maximum starting salary, or (iii) hourly wage that the employer “believes in good faith to be accurate at the time of posting” for any advertised “job, promotion, or transfer opportunity that can or will be performed, at least in part, within the State of New York.”

Although this statewide pay transparency bill has not yet been signed by the Governor, many expect that she will sign it eventually. If she does, the law will take effect 270 days following the date of her signature.

Assuming that the law does pass, I strongly recommend that employers use the new posting requirement as an opportunity to review all of their pay practices. This would include a review of pay equity, employee exemption classifications, overtime rates, and so on. Be prepared to face more questions about your pay practices and make sure that your answers are on the right side of the law. As I’m reminded from my days as a teenager working in the music department, although money “Can’t Buy Me Love,” by paying your employees correctly you can make sure that plaintiffs’ lawyers don’t “Take the Money and Run.”

Ben Mudrick is a partner in the Labor & Employment practice at Harter Secrest & Emery LLP.  He can be reached at [email protected]