Bans on discussing pay come under attack

Four years ago when Mary Craig went to work as an assistant cook at an Ohio nursing home, her new boss made an odd demand: Never discuss pay with the other help. Loose lips would cause hard feelings, the boss said.

Craig soon racked up a promotion, an Employee of the Month award, an outstanding year-end evaluation and written praise for her hard work and cooperative attitude. The nursing home, the Main Street Terrace Care Center in Lancaster, Ohio, also gave her a raise. Again, her boss told her not to discuss pay.

But Craig disobeyed those orders. The other kitchen helpers kept coming to her with their paycheck woes, and she was a sympathetic listener.

One said that she was being shortchanged on overtime. Another said her hourly rate had been cut. A third woman, promised a raise when Craig was told about her own, compared notes two months later and discovered that only Craig had received an increase.

Would Craig help? "I said, `Sure!'" Craig, now 52, recalled.

She brought the complaints to the supervisor. Adjustments were made to the others' paychecks. And soon, 10 days before Christmas 1997, Craig was fired.

The job market may be extraordinarily employee-friendly these days, but that does not necessarily mean you get to tell colleagues about your pay, perks and bonuses. Some managers still warn employees not to discuss pay, under penalty of dismissal. And every so often, one makes good on the threat.

Though no one seems to track how commonplace pay-confidentiality policies are, and though many employees prefer to keep their earnings secret in any case, complaints have come about in companies of all shapes and sizes. And now working-women's groups are attacking pay- secrecy rules, arguing that they perpetuate the gap between men's and women's earnings.

"Company policies that prohibit employees from discussing their salaries with co-workers keep them in the dark" about discriminatory discrepancies, said Gail S. Shaffer, chief executive of Business and Professional Women/USA, in testimony last month before the Senate Committee on Health, Education, Labor and Pensions.

She urged the senators to support legislation, proposed in both houses of Congress, that proponents say would bring attention and add muscle to laws that already make it illegal for employers to discriminate based on gender or to fire or reprimand employees for revealing their earnings.

The gap between men's and women's earnings has narrowed consistently since the Equal Pay Act became law in 1963, but it has not disappeared. Government data for 1999 show, for example, that male nurses earn 6 percent more than female nurses and male accountants earn 37 percent more than their female counterparts.

The reasons for such disparities have been debated for years, but pay-equity advocates believe that discrimination plays a part, often hidden behind a veil of confidentiality. "We have consistently heard that many employers have rules against employees sharing salary information with each other," said Ellen J. Vargyas, legal counsel for the Equal Employment Opportunity Commission.

Ellen Bravo, co-director of 9 to 5, the National Association of Working Women, said her group has heard the same story through the hot line it runs for women with workplace problems.

"We hear this from professionals as well as entry-level workers," she added.

The proposed bills would amend the 1963 statute, which currently prohibits pay differences based on sex for men and women doing similar work in the "same establishment." The amendments would allow for class-action lawsuits, with compensatory and punitive damages; eliminate the "same establishment" requirement; make it harder for employers to explain away wage differentials; direct the Labor Department to create guidelines for "comparable" jobs; and make it illegal to fire or reprimand employees for talking about pay.

A much more limited bill was introduced by Sen. James M. Jeffords, R-Vt., chairman of the committee holding the hearings. It would prohibit employers from issuing oral or written pay-confidentiality orders and from firing workers who discuss their pay. But it does not address such contentious issues as punitive damages or comparable worth.

In fact, it is already illegal to forbid discussions of pay, under federal labor laws enacted in 1935. For 65 years, the administrative courts of the National Labor Relations Board have held in case after case that employees are free to reveal their wages to one another, and that people fired for doing so must be reinstated.

But with organized labor in a deep decline, few employees know about the labor laws anymore. And a lot of employers erroneously assume that the statutes do not apply to nonunion employees.

For many managers, including those who do not formally make pay confidential, the thought of any new law that could set off a wave of freewheeling pay discussions is disturbing.

There are many valid reasons, they say, for keeping pay under wraps.

"It would create morale problems if one person were allowed to boast about their huge merit bonus," said Sally J. Scott, a partner in the Chicago law firm of Franczek Sullivan, an employment law firm that represents management.

Compensation "is treated as a trade secret," added Jay W. Waks, a management labor lawyer at Kaye, Scholer, Fierman, Hays & Handler in New York. "If a competitor finds out, it could mount a really successful hiring attack."

And a spokeswoman from the American Management Association, which tracks workplace practices, said it is not just managers who want to keep pay secret -- so do many employees.

Allison McAfee, director of communications for the Service Merchandise Co., said that had been the reasoning behind her company's written pay-confidentiality policy. "It's not so much to prevent employees from telling others, as asking others what they make," she said, adding that nosy employees can be a nuisance to their colleagues.

Service Merchandise, a Nashville, Tenn.-based retailer, dropped its policy after a saleswoman who was fired for discussing wages filed a complaint with the NLRB. A three-judge panel in 1990 rejected the company's arguments that it had to keep wages secret to protect employee privacy, and to compete in the Tennessee labor markets, and ordered the retailer to offer the saleswoman her job back and post a notice that it was rescinding the ban.

Randel K. Johnson, vice president for labor and employee benefits at the U.S. Chamber of Commerce, questioned the need for new legislation, arguing that if fear of firing were really such a big problem there would be more suits, under the existing laws.

"Laws shouldn't be amended just because somebody thinks it's a good idea," Johnson said. "Laws should be amended because it's been shown there's a compelling national reason. If anybody's been fired for this, I've never heard about it."

Employees confronted with confidentiality rules often worry that if they complain they will only make matters worse. Still, some take the plunge.

Last year, Tracy Jones of Milwaukee found work through a temporary employment agency, preparing furniture and appliances for shipping. One day, she overheard her male co-workers chatting about what good pay they were getting for such easy work, so she asked them what they made. She was shocked to learn they all were paid $1.12 an hour more than she was, even though they all came from the same temp agency, MaxStaff Employment Services, and none had more seniority.

Jones, now 33, said she went to MaxStaff, and asked why she, the only woman, was being paid less than all the men. The supervisor told her that she was wrong, that no one was paid more than she was. When the employees assembled for their van ride to the warehouse the next day, Jones recalled, the MaxStaff supervisor laid down the law: If they discussed their pay, they would be fired.

"I figured I could talk about anything I wanted to talk about," Jones said, so she waited until the boss was out of earshot, then challenged the men to prove they were paid more than she was.

Some of them gave her their pay stubs, which she took to the Equal Employment Opportunity Commission. Jones was fired.

"How is that legal in America?" asked Jones, whose EEOC complaint is still being reviewed.

A spokeswoman for MaxStaff's parent, Maximus Inc. of Mclean, Va., said she was not aware of Jones' situation, but said Maximus has no corporatewide policy against revealing pay. (She added that MaxStaff was a pilot venture and would be closed by the end of this month because it did not fit within the Maximus business model.)

After her dismissal, Jones said she tried to talk other MaxStaff women into filing complaints, but without success. "They were encouraging me to do it, but they didn't want to do it themselves because they didn't want to get fired," she said.

Craig, the former nursing home cook, said she had much the same experience. "I tell you, there's not very many that'll fight back," she said. "They know no one else will hire them if they take a company to court."

Indeed, after the center fired Craig B giving her no reason for the termination B she started looking for a new job, and encountered applications asking if she had ever sued an employer. Craig said she answered truthfully and found a new job anyway.

She said she would not have known she could file a complaint if it had not been for her husband, who owns a small oil-drilling business and has had to learn a smattering of labor law.

"I kept saying, `It ain't right! It ain't right!' And my husband, from his experience, knew just who to call," she said. Last year the NLRB ruled that the nursing home must reinstate her and pay her back wages, less the money she has earned in her new job. This month a federal appellate court affirmed the ruling.

Geoffrey Webster, the lawyer who represented the nursing home, said his client had complaints about Craig's work and believes it dismissed her lawfully. The ruling, he added, involves only a small amount of money: about $3,000, after deducting Craig's earnings from her new job.

In an age of multibillion-dollar tobacco verdicts, that is small potatoes, but Craig said she did not sue for the money. Nor does she want her old job back.

"I'd be afraid to take it," she said.

Instead, Craig said she sued to make a point. In response to her complaint, the labor board has ordered the nursing home to post a sign on its bulletin board, stating that employees are free to discuss pay if they wish.

"Every employee can read it, whenever they want," Craig said. "That's what I want."

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