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Salary Information Sharing

If you work in a company that provides co-worker salary information to you (which means your salary is also shared with your co workers), then thank the start-up and high tech industries of Silicon Valley for this new development. A leading pioneer in open salary data, SumAll, is a company whose core business is data analytics. On a shared drive, all workers can see investor agreements, all company financial records including P and L, Asset and Balance Sheets, Pro Formas, and more pertinent to this blog, co worker performance evaluations, hiring decisions and employee pay. Stripping away any vestige of financial privacy, co workers can also see worker equity and any paid or planned bonuses. the founder says this is an open Enterprise and people will work more efficiently when free of doubts about salary. The company currently has about 30 employees with salaries ranging from $35,000 to $120,000, according to the Wall Street Journal. One of the advantages of posting salaries is to alleviate curiosity and anxiety. Many California Labor Codes provide that employers must pay wages at a specific time; that prevailing wages must be paid (for example, in qualified public works projects); that contributions to pension and profit sharing plans must be made; that there can be no secret “give back” of wages paid, and other conditions surrounding pay. Sharing of data will help prevent violations of these statutes.

Some companies such as Tenmast Software out of Lexington, KY, keep individual salaries private but share in monthly strategic planning meetings. All employees attend financial literacy training classes. This gives the hourly workers a chance to see how their bonuses might affect the bottom line. Some companies like Peer Insight actually provide project evaluations with the entire office but keeps individual performance concerns private. One company with negative results, Rethink DB, found that open pay and salary ranges published, led to applicants using published salary ranges to bargain for more compensation than published.

In our current practice of representing California employees in workplace issues such as discrimination and privacy, we have not yet come across this level of openness. We would want to remind employers that the California Constitution (Article One, Section 1) provides all residents a zone of privacy. The Labor Code of California definitely provides that an employee can waive this privacy and, in fact, has the right to discuss his or her salary with co workers. In many of our discrimination cases (whether based on age, sex, race, national origin or physical and/or mental disability), the question of pay plays a large role in determining whether discrimination has occurred or not. Recent California decisions have allowed juries to consider whether employers who  lay off a high percentage of senior employees are engaged in a form of age discrimination based on higher pay. The trend towards more open discussion of pay should be helpful to employment attorneys seeking to introduce this evidence in trial and arbitration.

This column should be considered educational advise only. Legal advise pertinent to your case can only be given by an attorney licensed in your jurisdiction and with knowledge of the facts of your case. We practice in California only.