Women pay the same price for a gallon of milk as men. Their rent doesn’t differ based on sex. Neither do their electricity bills. However, employers continue to pay women less than men, even when doing the same job. Though women should not bear the burden of correcting this discrimination, the experiences of Lilly Ledbetter and Charlize Theron demonstrate that often employers only rectify these inequities when employees object. Employees can only fight against pay discrimination if they know about it, but many women cannot discover unfair wage disparities because their employers ban or discourage conversations about pay. These prohibitions cause many employees to fear retaliation simply for talking about or disclosing their pay. In fact, some workers have been fired for even discussing what they make.
Today, the Department of Labor (DOL) finalized its rule [PDF] implementing President Obama’s Executive Order to ban pay secrecy in federal contract workplaces, protecting millions of workers who want to ask about, disclose, or discuss their pay. This marks a tremendous victory for women workers. Pay transparency is a crucial stepping stone to closing the wage gap because it allows women to discover—and work with the employer to rectify—pay discrimination.
The Impact of Pay Transparency
The Department’s rule provides much needed sunlight that will help root out discriminatory pay practices in three ways. First, a culture of transparency allows female workers to learn what their male counterparts earn. By making employees aware of salary discrepancies, access to information allows women to call out unfair wage disparities. In addition, without wage secrecy to hide behind, the new rule creates incentives for employers to proactively identify, investigate, and remedy policies that lead to discriminatory pay discrepancies. And studies have shown that when workers can talk about what they earn and believe that they are being compensated fairly, worker satisfaction, morale, and productivity improve.
States are increasingly recognizing the importance of transparency in the workplace and have acted as leaders in providing employees with disclosure protections. Twelve states—California, Colorado, Connecticut, Illinois, Louisiana, Maine, Michigan, Minnesota, New Hampshire, New Jersey, Oregon, and Vermont—already have laws shielding workers from retaliation if they talk about what they earn, and New York’s bill passed the legislature and awaits a promised signature from the Governor. You can read about the strides states have taken and the model legislation they have passed in the National Women’s Law Center’s fact sheet on pay secrecy.
The DOL’s rule marks an important first step towards eliminating pay secrecy, since federal contractors employ over 20% of the U.S. workforce. But now we must urge Congress to pick up the baton by passing the Paycheck Fairness Act to—among other provisions strengthening the Equal Pay Act—ban punitive pay secrecy policies in the private sector, where fear of retaliation poses a significant hurdle for employees who want to gather information to determine if they have experienced wage discrimination.
Today, President Obama and the Department of Labor lead the way in demonstrating their commitment to working to end pay discrimination and ensuring equal wages in federal contracting. We look forward to future celebrations as pay secrecy and wage discrimination are rooted out from both the public and private sectors.