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Advice / Succeeding at Work / Money

The Ultimate Guide to Comparing Salaries With Your Peers

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An account manager at a tech company in New York received a company-wide email one day saying that sharing salaries was a terminable offense—after a colleague exchanged his salary with another co-worker.

“It got back to the manager, who was furious,” she says. The message was reiterated later at an all-team meeting: The company had a zero-tolerance policy toward employees sharing salary information.

The announcement had a chilling effect in the office. But it was also against the law.

“I kick myself for not knowing better,” the account manager says. “But for what it’s worth, nobody on the team seemed aware that this was an unlawful practice. I think everyone was just scared.”

She wasn’t alone in her experience. Roughly half of workers polled in a 2014 Institute for Women’s Policy Research/Rockefeller survey said that discussing wage and salary information with co-workers was either discouraged or prohibited at their organizations and could lead to punishment. Many companies tell workers they’re not allowed to discuss wages. It might be written in a handbook, mentioned in a meeting, or emphasized during review season.

But in fact, US federal law states that employers can’t discourage employees from discussing their salaries or penalize them for doing so. Unions wouldn’t be able to exist or function without the protection of this law—the 1935 National Labor Relations Act.

And being able to compare your compensation and discover the market rate for your role is critical to ensuring you’re being paid fairly.

If you’re wondering... What Are the Benefits of Pay Transparency?

Trading salary information with your network will make you better informed for your next review or salary negotiation. And it’s particularly important for historically underpaid groups, including women and people of color.

White women are paid on average 79 cents for every dollar a white man makes, according to the American Association of University Women The discrepancy is worse for Hispanic, American Indian, and African American women, who make 54, 57 and 63 cents, respectively, for each dollar a white man makes. Knowing the pay of your counterparts, particularly of differing genders and races, can help.

But pay transparency can also be hugely beneficial for employers.

“There’s a lot of data out there which says that when there’s salary transparency, there’s happier employees, and happier employees equals lower attrition,” says Claire Wasserman, founder of Ladies Get Paid, an organization that seeks to close the wage and leadership gap. “What goes on behind closed doors shouldn’t be sketchy. Not everyone makes the same,” Wasserman adds. But your employer should be able to explain differences in pay.

In recent years, Salesforce, Apple, and several other tech companies have done company-wide pay analyses and say they’ve worked to close pay gaps as a result. Buffer, a social media marketing company, has gone one step further and publishes its employees’ salaries online. Although the company still has a gender-based pay gap, it’s narrower than the national average.

Overall, companies are more financially successful when people are paid fairly and leadership is diverse, says Wasserman. “It’s not just looking at salary transparency on its own, it has to be part of a holistic company culture” that promotes equality, she adds.

If you’re wondering... How Does the Law Protect You? (And How Doesn’t It?)

The National Labor Relations Act states that most private sector workers, excluding supervisors, have the right “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” In other words, the law protects workers who join together to improve their wages or working conditions, with or without a union.

Legally, it’s pretty clear cut that employees have the right to talk to their co-workers about pay, according to Cynthia Estlund, a professor and expert in labor and employment law at the New York University School of Law. And the National Labor Relations Board has repeatedly struck down workplace policies that prohibit employees from discussing their salaries with one another.

“If employees are disciplined or discharged for doing that or even if they’re just warned against doing that, it’s a violation of the National Labor Relations Act,” says Estlund.

That’s great in theory, but the problem is that companies don’t face much of a deterrent. If you’re reprimanded for discussing salaries, you can file a complaint with the NLRB within six months, wait for an investigation, and at most expect an order telling the company to stop and to post notices in the office about employees’ rights. If you’re fired for discussing pay, you can claim reinstatement and back pay through the NLRB, but most complaints are either settled, withdrawn, or dismissed. You can’t claim damages—only back pay and reinstatement—regardless of any distress caused by your dismissal. And according to Estlund, the board has been criticized for long delays and weak remedies.

As such, companies routinely get away with breaking the law. “I don’t think employers have much fear of violating the law,” says Estlund. “I don’t think employees almost ever bother to challenge them.”

The bottom line is that even though you’re legally allowed to discuss wages, that doesn’t mean there aren’t risks, or that there can’t or won’t be repercussions. In reality, employers hold a lot of the power here, and those that oppose transparency might lash out at workers who exercise their rights. But that doesn’t mean there aren’t ways to proceed sensitively to arm yourself with more information that you can use to your advantage.

If you’re wondering... How Can You Find Out What Other People Make?

Comparing salaries with co-workers can be tricky and awkward, but it can also help you figure out where you stand and what to do next.

You can limit the chances of being chastised by your employer by having face-to-face conversations with colleagues outside the office and avoiding company platforms such as email or Slack. And remember that it’s a two-way street; sharing your own salary data will help your co-workers be open with theirs.

But speaking to colleagues internally won’t give you the full picture. In order to understand the market rate, you need to speak with people outside of your organization. “It’s a better argument to make, and safer one to make, to compare your salary to other companies because there’s a competition element there,” Wasserman says. “When you go in to ask for more money, it should always, always, always be tied to market data.”

Besides, it’s often more comfortable to compare salaries with those working elsewhere, as feelings of rivalry are less likely to arise. So, Wasserman recommends looking at other companies with similar numbers of employees.

She also urges you to “tap into the power of your network.” That means reaching out to people you know well, as well as those in your extended network. She recommends writing a short but clear note describing the profile of the people whose salary information you’re looking for and asking your contacts to forward it to people they think might be a fit. You can ask people to contribute anonymously if you’re worried about making such a sensitive request of strangers.

Sharing the data you’ve found as you go is a great way to engage people and make them more likely to open up about their salary. For example, you can say: “I’ve found that people in this type of role make between X and Y. Am I off base? If so, by how much?”

If you’re wondering... What Can You Do With That Information?

Yes, it can be a bitter pill to swallow if you find out you’re being underpaid. But at the same time, the information puts you in a better position to make the best decisions about your career. Once you’ve recovered from the initial hurt, you can consider your next steps and take action.

Negotiate a Raise at Your Current Company

A software engineer in San Francisco was being paid $90,000 and was offered a $15,000 raise after working two years in the same job. But when she found out that her team’s recent intern-to-hire was making $100,000, she used it to justify asking for a bigger bump.

“I protested that if we were giving interns $100k, I should be getting more than $105k. They came back with a $25k salary increase, which I was happy with,” she says.

So how do you go about getting your salary increased? Ask to meet with your manager, be positive, and frame the conversation around how you add value to the company. “Say you would like to understand why you’re being paid X and what do you need to demonstrate to get to a better place,” says Wasserman.

Use phrases like “I’m invested in this company and want to see it do well” and “I want to be sure I’m on a path for growth.” Cite your findings on the market rate for the same role at other companies, in addition to any internal discrepancies. If competitors are paying more, you can make it clear that you want to stay (if that’s the case), but ask your manager: “What can we do together to get there?” says Wassermann.

If you’re unsuccessful in obtaining a raise this time around, you should ask what you need to demonstrate to get your salary increased in the future and request a review in six months or a year for accountability.

Be diligent, Wasserman adds. Send a calendar invite before the meeting and if it’s canceled be sure to reschedule. Set an agenda and be prepared to show your bosses all the things you’ve done since you last met (this worksheet can help you organize your thoughts). Request clear goals and don’t be afraid to ask, “Why am I not there yet?”

Wasserman stresses that every conversation will be different, and that you should tailor your approach based on the relationship you have with your manager.

Move On

Sometimes finding out what the market rate is for your type of role will help you decide that it’s time to leave a job.

A journalist in New York found out how much a peer at a competing publication made. “She had the same background, covered the same beat, and had the same amount of experience, but was literally making $30,000 more per year than me.” Armed with this market research at a time when her own publication was making layoffs, she decided to start looking for a new job immediately and got hired at a competitor making $15,000 more than her previous job.

Sometimes being willing and ready to move on and getting a competing offer is what will end up getting you the significant raise you want at your own company. “At lot of times that’s the only way people get raises, or up to market value,” says Wasserman. But using a counteroffer as leverage can backfire, so do it carefully.

The more you know, the better you can advocate to be paid the market rate for your job and level of experience. Helping to foster conversations about salaries—with your co-workers and beyond—will prevent you from feeling blindsided. It may be awkward at first, but these discussions are well within your rights, and stand to benefit us all.