Did you know that it violates the law if your company has a policy or practice that forbids your employees from sharing their “confidential” compensation information? It’s really true.

The National Labor Relations Board (NLRB) has ruled repeatedly that confidentiality provisions in employee handbooks and other written policies forbidding the discussion among fellow employees and others of wages, benefits, and conditions of employment violate Section 8(a)(1) of the Labor Act. This includes discussions of such things as wage reviews, pay grade levels, wage increases, and overtime. It’s called the Lafayette Park Hotel doctrine. Even non-union companies are regulated by the National Labor Relations Act administered by the NLRB and subject to this rule.

The NLRB’s rationale is that the Labor Act guarantees to all employees the right to speak out, engage in protected concerted activity, and to undertake union organizing efforts. These organizing activities would most likely include a discussion by pro-union employees with union representatives about current wages and benefits at their company. Therefore, the NLRB believes a company rule like this has a “chilling effect” on employee rights, even if the company has no anti-union animus. There are even a few cases ruling that an ambiguous clause merely stating that “the company’s business and documents are confidential; disclosure is prohibited” can violate the law because the rule could be interpreted by employees to encompass wage and benefit information. But this is not the majority rule.

So, be careful about what you say and publish that may limit the rights of your employees to speak out about wages, hours, and conditions of employment. Remember that if you terminate an employee for violating such a rule, the company may very well be ordered to reinstate the employee with back pay and benefits, and the company will be required to post a public notice admitting liability and promising not to violate the law ever again.

Disclaimer: This discussion is generalized in nature and should not be considered a substitute for professional advice. Readers are advised to contact counsel before embarking on any of the options discussed in this article.