Summary
The Upshot
- Salary history laws, which are becoming more common across the country at the state and local levels, aim to eliminate the historic pay gap for women and people of color by barring employers from relying on past, potentially discriminatory pay practices in prospectively setting compensation.
- Philadelphia passed this salary history ban three years ago, but it was subject to a legal challenge.
- The Ordinance will only apply to job applicants for a position located within Philadelphia and will not apply to applicants for internal transfers or promotions.
The Bottom Line
FULL ALERT
Starting September 1, 2020, Philadelphia employers will no longer be able to ask job applicants about their salary history, or require job applicants to disclose their salary history during the application process. Applicants may choose to disclose their wage history voluntarily, but an employer cannot use that information in setting initial wages. Finally, Philadelphia employers may not retaliate against applicants who refuse to disclose their wage history in accordance with the Ordinance.
Ordinance’s Tormented Legal History
This Ordinance has had an embattled history. It was enacted in January 2017, but the Chamber of Commerce for Greater Philadelphia filed a lawsuit challenging the legislation as a violation of constitutional free speech rights before it took effect. In 2018, a federal judge in the Eastern District of Pennsylvania agreed, blocking the portion of the law that prevented employers from making salary history inquiries. In February 2020, the Third Circuit Court of Appeals overturned that injunction, concluding that the important goal of pay equity outweighed any infringement on free speech rights. Instead of appealing the decision to the Supreme Court, the Chamber of Commerce decided to work with the City of Philadelphia in drafting regulations and FAQs regarding the Ordinance.
PCHR Offers Clarifying Guidance on Ordinance
The FAQs and regulations clarify that this salary history ban only applies when an employer is interviewing a job applicant for a position located in Philadelphia. Therefore, the location of the employer’s headquarters, or whether the interview itself occurs within Philadelphia, are not relevant considerations. The PCHR cautions that, even if a job does not require an employee to spend all of their time in Philadelphia, the position may still be covered depending on the job’s “overall ties to Philadelphia.” The PCHR recommends considering how much of the employee’s time will be spent in Philadelphia, whether the employee will have a workstation in Philadelphia, and the extent of the employee’s contact with Philadelphia, including the location of clients, projects or transactions.
Further, this ban on salary history inquiries only applies to applicants seeking positions with a new employer. It does not affect employees who are applying for internal transfers or promotions.
Instead of relying on salary history inquires, employers can look to market data, or ask applicants about their salary expectations, provided that employers do not ask the applicant to connect their salary expectations with past wage rates.
Attorneys in Ballard Spahr’s Labor and Employment Group regularly assist organizations with pay equity and discrimination issues, including training and audits of compensation systems.
Copyright © 2020 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.
This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.