California Labor &
Employment Law Blog

Feb. 29 2016

Criticizing Your Boss’s Salary May Not Cost You Your Job Under New California And Federal Laws

Topics: Court Decisions, New Laws & Legislation, Union-Management Relations

Writing an open letter to the CEO of your company about your pay may go viral on the internet and draw a firestorm of commentary, but California’s new Equal Pay Act and a recent decision from one federal Court of Appeal may limit what an employer can do in response to such criticism and commentary.

Under the federal National Labor Relations Act, both union and non-union employees are afforded organization and collective bargaining rights, including the right “to engage in [] concerted activities for the purpose of … mutual aid or protection.” In MCPC Inc. v. NLRB, the Third Circuit Court of Appeals, based in Philadelphia, recently addressed the issue of whether one non-union engineer’s criticism of an executive’s salary was such a protected activity.  There, the engineer was attending a “team building” lunch with his director and three other engineers and was discussing how busy everyone was because of the engineer shortage. The engineer commented that the company could have hired several additional engineers with the $400,000 salary the company was paying a recently-hired executive. The executive’s salary information is not something the engineer should have known, so the company grew understandably concerned about the security of its confidential and proprietary information. The company suspected that the engineer obtained the salary information through improper means. When it did not get a satisfactory answer to its concerns, the company fired the engineer.

Even though the engineer was not a union member, the NLRB General Counsel filed a complaint charging the company with enforcing an overly broad confidentiality policy and improperly firing the engineer for complaining about working conditions, which the NLRB viewed as “protected concerted activity.”  On appeal from the NLRB’s ruling that the termination decision was invalid, the Third Circuit affirmed the NLRB’s ruling and held that the engineer’s lunchtime commentary about the executive’s salary was protected concerted activity under the National Labor Relations Act.  The Court found that the comments were protected because they were made in a group setting and pertained to a specific staffing grievance. (Despite this holding, the case is still not closed because there is an open question to be decided by the lower court as to how the engineer obtained the information and whether the engineer could have been legitimately terminated for improperly obtaining the information and then lying about it.)

Like social media posts (reported earlier here), this decision is another yet another instance of the NLRB finding concerted activity in novel circumstances and in union-free workplaces.  But this outcome, however, may not be unique to federal law and California has its own independent state law protections that allow employees to discuss compensation information and inquire about compensation of co-workers.

Here in California, SB 358 amended California’s Equal Pay Act, effective January 1, 2016.  In addition to altering the law on how one may prove that they are not being paid at the same rate for similar work, the amendments expanded the ability of employees to communicate about their wages by adding to the existing protections of Labor Code section 232.  Section 232 already prohibited employers from requiring as a condition of employment that the employee refrain from disclosing the amount of their own wages.  Now, California law makes it unlawful for an employer to prohibit or prevent an employee from not only disclosing their own wages but also protects employees from discipline or adverse action for (a) communicating about the wages of other employees or (b) inquiring about wages of other employees.  Violations of this new provision may result in the reinstatement of the employee as well as reimbursement of lost wages and work benefits. (SB 358 is codified at new Labor Code section 1197.5(j).)

Employers have a legitimate interest in limiting office gossip about employees’ salary, which may cause resentment and strife in the workplace. Unfortunately, however, this recent federal decision and the new California law are reminders that employers must be extremely cautious when considering disciplinary measures against employees for communicating about  their own pay or the pay of others.  

About CDF

For over 20 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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About the Editor

Robin Largent represents employers, including major food and retail companies, in all types of employment litigation: wrongful termination, retaliation, breach of contract, wage and hour (California Labor Code) and unfair competition. She also regularly counsels and advises California employers on issues of compliance with California and federal employment laws.
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