A marketing director at one of Covenant Care's nursing facilities attended a meeting of other marketing directors in the company. During the meeting, she joined other directors in a brief discussion about their pay, specifically the bonus structures at the different facilities.
Six days later, she was fired for publicly talking about her facility's bonus system, something the company didn't want employees to do. She sued, alleging. A lower court sided with the company, but a federal appeals court reversed and let the case proceed.
Reason: The company argued that because she was an at-will employee, she could be fired for any reason. But most states recognize certain exceptions for firings that violate a "public policy" in state law or court rulings. And California law has a specific public policy that forbids disciplining "an employee who discloses the amount of his or her wages." (Grant-Burton v. Covenant Care Inc., No. B151342, CA 2/1, 2002)
Also, a blanket policy that bans talk about pay will likely violate the National Labor Relations Act. Two years ago, the Equal Employment Opportunity Commission (EEOC) cited the law in winning a $280,000 settlement for six workers fired for comparing paychecks. (YATL, October 2000)
Advice: Get the word out to managers that it's illegal to retaliate against employees who talk or complain about their pay. Courts won't look favorably on your argument that putting a lid on talk is necessary to maintain morale and keep wage trends in check.
In this case, the court acknowledged that comparing notes on pay may cause "jealousy and strife" among employees. But it said that alone isn't a justifiable business reason to ban such talk.