Philadelphia Salary History Ban Violates Free Speech

It’s OK to ask about previous salary, but employers still can’t use wage history to set pay

Roy Maurer By Roy Maurer May 3, 2018
Philadelphia Salary History Ban Violates Free Speech

​Philadelphia employers can ask job candidates to disclose their salary histories, but can't use that information to determine their pay, a federal judge ruled April 30. To play it safe, employers might want to eliminate salary history questions from their hiring processes, experts say.

The city's law prohibiting employers from asking candidates to reveal their past salaries violates the First Amendment's free-speech clause, ruled U.S. District Judge Mitchell S. Goldberg. He granted a preliminary injunction temporarily halting that portion of the city's ordinance.

But Goldberg also decided that the city could stop employers from using salary history to set pay and held that the portion of the law prohibiting employers from relying on wage history to determine salary should remain intact.

"If an employer asks about wage history, which is legal, but then relies upon that wage history to set the employee's compensation, that would violate the law," said Eric B. Meyer, a partner in the Philadelphia office of FisherBroyles. "The original intent of the law remains intact—that is, Philadelphia employers cannot rely on salary history in making employment decisions. But if you want to ask about salary history for some other reason, like creating a compensation survey or study, knock yourself out."

The opinion could set the stage for further challenges to salary history bans across the nation. "It is likely that one or both of the parties will appeal Judge Goldberg's ruling to the Third Circuit Court of Appeals, and it is even possible that this case eventually will make its way to the U.S. Supreme Court," said Tracey Diamond, counsel with Pepper Hamilton LLP, in the Philadelphia office.

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In January 2017, Philadelphia became the first city in the nation to adopt a salary history ban— legislation prohibiting employers from inquiring about the salary histories of applicants for employment. The intent of the legislation was to address the gender pay gap by ensuring that low pay doesn't follow women from job to job and compound over time. Similar laws have been enacted by states and cities across the country, including California, Massachusetts, New York, Oregon, New York City and San Francisco.

The Philadelphia ordinance was originally set to take effect in May 2017 but was challenged in a lawsuit brought by the Chamber of Commerce for Greater Philadelphia and some of the city's large employers, including Comcast and Children's Hospital of Philadelphia. The city agreed to delay implementation of the law while the suit played out.

Chamber of Commerce spokeswoman Danielle Hagerty said that the chamber supports the city's goal of gender wage equity but challenged the salary history ban as a way to achieve that goal.

Judge Goldberg agreed. "While the court found that the city has a substantial interest in promoting wage equity and reducing discriminatory wage disparities, and that a gender pay disparity does exist, the court noted that there is scant evidence that prohibiting employers from asking applicants about their wage history would actually do anything to reduce the wage disparity," Diamond said.

Mike Dunn, deputy communications director for the city of Philadelphia, said that the city was "encouraged that the judge agreed that the city does have the legal authority to prohibit employers from relying on salary history when determining the wage of a new hire" and that the city is evaluating its next move.

Hagerty said that the chamber hopes to meet with city officials to review steps both sides can support.

In the meantime, Diamond advises Philadelphia employers to strongly consider eliminating questions about salary history from their hiring process. "Since the part of the ordinance prohibiting employers from considering salary history at any point in the employment process still stands, employers that have obtained salary history will have a difficult time unringing the bell and defending a claim that, although they asked an applicant about his or her salary history, they did not consider that history during the job application process."

Regardless of whether employers obtain salary history information, they will have to prove that any wage disparities between employees in different protected categories are the result of a permissible reason and not the result of past salary information, she said.

Meyer pointed out that the law only pertains to employers when they do business in Philadelphia. "Just because Target, for example, has a location in Philadelphia doesn't preclude it from asking salary history questions and relying upon that data in another city that doesn't have a similar law."

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