Making salary information public shows transparency which in turn can boost employee morale; while on the other hand, keeping this information private can cause employees to feel “cheated” if they learn that someone in the same position is receiving higher pay.
Although transparency is valuable, there are some downsides to making salary information public. For one, this might cause some employees to feel that they are being paid too little in comparison to others, which may lead to a hostile or jealous work environment. This also limits the employer’s ability when it comes to negotiating salaries.
Although some companies choose to keep salaries confidential, they should be weary of discouraging employees from sharing their wage information as this may be illegal. The National Labor Relations Act (NLRA) prohibits employers from preventing employees from discussing pay with each other.
Furthermore, President Obama signed an Executive Order in 2014 which prohibits federal contractors from retaliating against employees who disclose their wage information. Should the Paycheck Fairness Act pass, this protection will apply to all employees.
There are positive and negative aspects to both options when it comes to disclosing salary information, but regardless of how each company chooses to handle this, it is important that they stay in compliance with the NLRA.
-HR Daily Advisor