Discussion of Wages Handbook Statement: California
When to Include This Statement
Under California's expansive equal pay law, employers cannot prohibit employees from disclosing their own wages or discussing or inquiring about other employees' wages. Employers who want to emphasize compliance with, and educate their workforces about this law, should consider including this statement in their handbook.
Customizable Handbook Statement
Discussion of Wages
Employees are permitted to disclose their wages and discuss or inquire into another employee's wages. The Company will not terminate, demote, suspend, or otherwise discriminate or retaliate against employees on the basis of such an inquiry or disclosure or because employees exercise their rights, or aid or encourage other employees in exercising their rights under California's Equal Pay Law.
This policy does not require disclosure of wages.
Guidance for Employers
- California's equal pay law is one of the strongest in the nation. Under the law an employer cannot prevent its employees from disclosing their own wages, discussing other employees' wages, inquiring about other employees' wages or assisting another employee with the assertion of his or her rights under the law.
- The law provides that no one, including the employer, is obligated to disclose employee wages. Therefore, an employer can decline to disclose wage information about other employees in response to an employee inquiry, though it cannot discipline the employee for that inquiry.
- The law also prohibits employers from discriminating or retaliating against any employee for invoking the employee's own rights under the law or assisting others in doing so.
- A separate California law prohibits California employers from requiring, as a condition of employment, that employees refrain from disclosing the amount of their wages; requiring an employee to sign a waiver or other document that denies the employee the right to disclose the amount of his or her wages; and from terminating, formally disciplining or otherwise discriminating against an employee who discloses the amount of his or her wages.
- California's equal pay law requires that employers meet a high burden in order to prove that any pay difference is tied to an absolute business necessity and, therefore, is nondiscriminatory. California employers should review compensation-related policies and procedures, job descriptions and employee salaries with counsel to ensure that pay differences are the result of business necessity.
- California employers should also ensure that they have an adequate internal complaint procedure that will allow employees to voice any concerns regarding wage differential issues.
- The pay equality law requires that employers maintain records related to employees' terms and conditions of employment (including, but not limited to, wage information and job classifications) for three years.
- The National Labor Relations Board takes the position that a policy may be unlawful if it could be reasonably construed to prohibit employees from disclosing or discussing information lawfully obtained related to the terms and conditions of employment, such as employee wages (including the wages of other employees) and benefits. Employers should work with legal counsel to ensure that their policies and procedures are not overbroad and could not be reasonably interpreted to prohibit protected employee discussions regarding the terms and conditions of employment.