The City of Philadelphia’s effort to ban employers from asking about the wage history of job applicants is one step closer to reality now that a federal appeals court has rejected a First Amendment challenge to the law.

The ruling in the closely watched case could be influential in other jurisdictions that have adopted some form of a ban on wage history inquiries. These include the states of Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, New Jersey, New York, Oregon, Vermont and Washington. as well as multiple cities and localities.

In its 67-page opinion in Greater Philadelphia Chamber of Commerce v. City of Philadelphia, a three-judge panel of the Third U.S. Circuit Court of Appeals concluded that the City has a "substantial interest" in "closing the wage gap," and that the ordinance would advance that interest.

Philadelphia argued that it amended its Fair Practices Ordinance in 2017 to address the disparity in the pay of women and minorities. The law contains two provisions: the “Inquiry Provision,” which prohibits an employer from asking about a prospective employee’s wage history, and the “Reliance Provision,” which prohibits an employer from relying on wage history at any point in the process of setting or negotiating a prospective employee’s wage.

In addition, the law prohibits retaliation against a prospective employee for failing to comply with any wage history inquiry or otherwise asserting her or his rights under the new law. It specifically prohibits reliance on wage history in determining the wages to be paid or offered to a prospective employee unless the applicant “knowingly and willingly disclosed his or her wage history.” The only exception is where another law “specifically authorizes the disclosure or verification of wage history for employment purposes.”

The Chamber of Commerce for Greater Philadelphia filed suit in federal court seeking to block the law from going into effect and succeeded in having the law put on hold while the challenge was litigated.

If the Third Circuit decision is not overturned, the law would be enforced by the Philadelphia Commission on Human Relations which is authorized to seek substantial fines and criminal penalties. In addition, an aggrieved person can file a private suit seeking compensatory damages, punitive damages, counsel fees, court costs and other equitable relief.

If the law becomes effective, the Commission is expected to amend its poster listing unlawful employment practices that employers are required to post and exhibit prominently “in any place of business where employment is carried on.”

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