BUILDING SUCCESSFUL BUSINESSES

Can your company fire workers for talking about compensation?

| Jun 16, 2021 | Employment Law

Wage claims often start with an employee realizing that they don’t make the same amount as someone else on the payroll with similar experience or responsibilities. Those who believe they have not received a fair wage based on their sex or race might band together with other employees and file a lawsuit against the company that employs them.

Businesses obviously want to keep the risk of wage claims as low as possible. One of the more common solutions involves a company including a rule in their employee handbook or even a clause in their employment contract that prohibits staff members from discussing pay and other forms of compensation.

If you have such a prohibition in place, can you terminate the employment of a worker who violates that rule?

Discussing compensation is a protected activity

Open and honest communications with other workers about what they make and their treatment on the job is often an integral part of worker organization and unionization. As such, these activities typically have protection under the law to prevent employer retaliation.

Your company can include rules prohibiting the on-the-clock discussion of wages, but you will likely find it difficult if not impossible to enforce those rules. If you do terminate someone for discussing their compensation with other workers, that action might result in claims of retaliation or attempts to prevent the unionization of workers.

 How can you prevent wage claims if you can’t prevent sharing about compensation?

The simplest solution to help companies prevent claims of unfair or discriminatory wage practices is to commit to fair wage practices.

You can’t find a racial or sex-based disparity in pay if you don’t actively look for it. While the company may have fair pay policies, instituting them can be hard. Not everyone negotiates for raises the same way, and those making compensation decisions for the company have internal biases impacting their decisions.

The more frequently your company reviews criteria for offering wages or setting base pay, and reviews the pay of similarly qualified people in different departments, the easier it will be for you to head off trends that could develop into allegations of unfair pay practices.