What keeps you from comparing your paycheck with your coworkers? Is there a policy at work that prevents you from discussing how much you earn? Do you think you already know what they make? Turns out neither of these are very good reasons for keeping pay a secret.

Pay is frequently the subject of curiosity and gossip. In American culture, it ’ s considered impolite and inappropriate to disclose one ’ s own salary, but we still speculate about what our coworkers earn. Those of us who think we know how much our bosses and coworkers earn are probably wrong. Research shows that we tend to overestimate the pay of others. Websites like Glassdoor allow employees to share information about their employer, jobs, and salaries, anonymously skirting the pay secrecy policies for coworkers and job seekers. 

Pay secrecy policies that forbid employees from discussing salaries are not uncommon, although they are mostly unenforceable. The National Labor Relations Act has protected the rights of most nonsupervisory employees and employees engaged in collective bargaining to discuss wages since 1965.  Employees in government, public education (including universities), and many nonprofits have salaries posted publicly. So why do companies still have policies prohibiting discussing salaries? Some are concerned that it might lead to morale problems or jealousy over the higher salary of a coworker. It could also cause problems if a competitor found out and was able to mount a “hiring attack” to lure away the top producers.

Arguments against pay secrecy policies are mounting, however. One proponent of eliminating pay secrecy is Ed Lawler, a professor at the University of Southern California. He argues that if people challenge a pay system, it may be because they are right in doing so. “Maybe you really are doing a bad job and getting that feedback directly—and based on valid data—is a good thing because it can stimulate you to improve.” Another concern is that pay secrecy may be masking pay discrimination. Pay secrecy rules make it difficult to determine coworkers ’ salaries for comparison if you feel that you are earning less than others in your same position and may be the victim of discrimination.

Timely information is important, too. The Lilly Ledbetter Fair Pay Act was passed to allow employees more time to discover pay discrepancies that may be discriminatory. Lilly Ledbetter was a Goodyear employee who filed a pay discrimination suit against her employer after being anonymously informed that male coworkers had been paid significantly more than she was for the same work for many years. Her case went all the way to the Supreme Court, which determined that her complaint was made too long after the discriminatory pay decision was made. There is concern that the practice of pay secrecy may be intended to make discovery of discriminatory practices so difficult that an employee will miss the 180‐day deadline.

Ethical questions: 

Do you want to know how much money your coworkers earn? How eager are you to tell them how much you earn? Is pay secrecy a valid management tool to prevent jealousy and morale problems, or is it an unfair practice that hides discrimination and ineffective compensation policies?