One little noticed provision in the proposed federal "Paycheck Fairness Act" would affect standard language in many confidentiality agreements and policies. Specifically, the Paycheck Fairness Act, which is intended to fight discriminatory pay practices, contains a provision that bars an employer from taking adverse action against an employee who “has inquired about, discussed or disclosed the wages of the employee or another employee . . ."
Although there is an exception for employees who have “access to the wage information of other employees as a part of such employee's essential job functions" (e.g., managers who set compensation or HR employees), this provision would effectively bar employers from restricting most employees’ ability to discuss or disclose their own compensation or that of their co-workers.
Many employers have confidentiality agreements and/or confidentiality policies that expressly bar employees from discussing or revealing wage information. Although such provisions would not be rendered unlawful by the Paycheck Fairness Act, in most instances, they would be unenforceable.
Accordingly, if, as expected, the Paycheck Fairness Act becomes law (it was passed by the U.S. House in January 2009 and is currently pending in the Senate), employers may want to review provisions in confidentiality agreements and policies that expressly bar the disclosure of wage information.
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