Pay secrecy policies contribute to lower wages for women and racialized people

February 17, 2021

Patrick Denice, Assistant Professor, Department of Sociology

Story by Rob Rombouts/submitted photo

How much do you make?

This can be a loaded question for many, and in many workplaces, discussion of pay is discouraged or even prohibited.

Patrick Denice, assistant professor in the Department of Sociology, along with Shengwei Sun of the Institute for Women’s Policy Research and Jake Rosenfeld of Washington University in St Louis, surveyed workers to determine how prevalent these polices were, and what impact they had on workers’ actions. They published their findings in a policy brief for the Institute for Women’s Policy Research.

Nearly half of all workers in the US are subject to rules either discouraging or outright prohibiting discussions of pay in the workplace. This is despite the fact that federal legislation protects workers’ rights to discuss their pay, and many states have passed their own pay transparency laws. However, such laws are often weakly enforced, carry few sanctions, and leave the responsibility for finding out how much their co-workers earn to individual workers.

“Workers may not even know that these policies are illegal,” Denice said. “If they get an employment contract, and such a policy is a part of it, a worker may not know that the employer really shouldn’t be asking them to keep their pay secret.” Many employers, for their part, may not feel there is a realistic chance of enforcement against instituting a pay secrecy policy.

Pay secrecy policies limit workers’ ability to bargain or negotiate with their employers by constraining the information available to them. Public sector workplaces tend to be more transparent, due in part to their higher rates of union membership and to the public reporting of wages in the sector. For instance, the Sunshine List in Ontario publishes the income of public sector workers earning over $100,000 in the province.

Even with the workplace pay secrecy policies in place, Denice said that norms against talking about money in the workplace appear to be eroding. While there is “a pretty strong norm among workers to not talk about how much they or their colleagues earn,” some groups of workers, especially younger workers and women, are more likely to break those norms.

Based on survey results, women are more likely to break pay secrecy rules at their workplaces. When discussing pay is formally prohibited, over 1 in 3 women report discussing their wages with co-workers anyway, compared to 1 in 4 men.

Denice noted that pay secrecy policies are “especially problematic for groups of workers that face other barriers in workplace – including women and racialized people who are already typically underpaid. If you aren’t able to find out whether you’re paid less than others at your work, or how big that gap is, it makes it difficult to negotiate for better, fairer wages.”

“Women are taking a risk when they break workplace prohibitions against discussing pay,” he said. Even though such policies are themselves banned, talking about their pay could come with consequences like retaliation from their employer. In this way, existing legislation could be supported by better enforcement and more information.
While the report focused on the US context, Denice noted that information about who is subject to a pay secrecy policy at work is hard to come by in Canada as well.

Additionally, similar efforts as among US states to explicitly ban pay secrecy have emerged in Canada. The Ontario government passed a pay transparency law in April 2018, but it was put on hold through further legislation in December 2018. The act would have required all publicly advertised jobs to include a salary range or rate, and to eliminate pay secrecy policies. More recently, a federal pay transparency law was introduced in November 2020 for federally-regulated workplaces. This law aims to raise awareness of wage gaps among federally-regulated workplaces, specifically for women, Indigenous people, persons with disabilities, and members of visible minorities.