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In a Trio of Cases, NLRB Finds Employers Liable for Issuing and Enforcing Rules Prohibiting Employees From Discussing Salaries and Wages

Volume 2, Issue 16
October 15, 2003

In three separate cases, including one involving a Las Vegas employer, the National Labor Relations Board ("NLRB") recently struck down rules prohibiting employees from discussing their wages with others and, in one of those cases, ordered the reinstatement of, and back pay with interest for, an employee terminated based on the unlawful rules.

The National Labor Relations Act ("NLRA") protects covered employees' rights to engage in "protected concerted activity" for their "mutual aid and protection." These rights include employees' ability to discuss their terms and conditions of employment amongst themselves, and extend to all non-supervisory employees covered by the NLRA, not just those that work in unionized bargaining units. Because wages are a primary concern of employees, employers cannot issue oral or written rules prohibiting employees' discussions of wages absent a showing of a substantial and legitimate business justification for such rules.

In one of the cases involving Alaska Ship & Drydock, Inc., the NLRB recognized that the employer did offer a business justification for its wage discussion policy, asserting that the rule was in place because its employees are not aware that the hourly wage rates are based on different skill levels and the rule prevents "hurt feelings" that would result should its employees become aware that they are being paid different hourly wage rates. However, the NLRB concluded that such a business justification is not sufficient to justify limiting employees' rights under the NLRA.

These cases should remind all employers, regardless of whether or not they have unionized workforces, that one of the primary rights of all employees covered under the NLRA is the right to discuss their wage and salary information among themselves, as well as to acquire other employees' wage and salary information, even salary and wage information of managers and supervisors. The NLRB has also gone so far as to uphold employees' use of such information that is gathered surreptitiously.

Custom Cut, Inc., 340 N.L.R.B. No. 17 (2003); Labinal, Inc. 340 N.L.R.B. No. 25 (2003);
Alaska Ship & Drydock, Inc., 340 N.L.R.B. No. 95 (2003).

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.