Pay Equity: Update on Philadelphia's Salary History Ban

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Shook, Hardy & Bacon L.L.P.

Set against the backdrop of the women and minority rights movement, the City of Philadelphia is among a number of state and local governments that have enacted legislation intent on reducing or eliminating the wage gap. Philadelphia’s ordinance contains two provisions—first, it prohibits an employer from inquiring about an applicant’s wage history and, second, it prohibits an employer from relying on an applicant’s wage history in determining an employee’s salary. The City’s goal is to eliminate the formulation of salary offers based on previous salaries that are historically lower for women and minorities.

Before the ordinance was to go into effect in May 2017, it was challenged by the Chamber of Commerce for Greater Philadelphia on behalf of itself and several of its members. The Chamber, while supporting the goal of closing the wage gap, argued that each of the provisions of the ordinance violated the First Amendment’s free speech clause.

The underlying briefing from both sides focused on the level of scrutiny imposed by the ordinance. The City argued in favor of applying intermediate scrutiny, as it claimed the restricted speech is commercial. The Chamber, on the other hand, argued in favor of applying strict scrutiny, as it maintained that the speech does not qualify as commercial and the restriction is both content- and speaker-based. On April 30, 2018, U.S. District Judge Mitchell S. Goldberg of the Eastern District of Pennsylvania issued an order concluding that the first “inquiry” provision of the ordinance violates the First Amendment but that the second “reliance” provision did not implicate speech.

Following Judge Goldberg’s order, both the City and the Chamber appealed to the Third Circuit Court of Appeals. The parties’ briefs have not yet been filed, but a number of amicus curiae submitted briefs in support of their respective positions. Among those arguing against the ordinance are the Washington Legal Foundation (WLF), the National Federation of Independent Businesses (NFIB), the Pennsylvania Manufacturers’ Association (PMA), the Pennsylvania Chamber of Business and Industry, and U.S. Chambers of Commerce.

In its brief, WLF argues that Philadelphia’s ordinance “prohibits truthful, non-misleading speech on the basis of its content and the identity of the speaker.” The WLF brief concentrates on the “inquiry” provision and reasons that the prohibition is unconstitutional because it focuses strictly on prospective employers and allows those employers to speak about any topic with a candidate, except the specific topic of the candidate’s wage history.

The joint brief submitted by NFIB, PMA and the Pennsylvania and U.S. Chambers focused on the effect the ordinance would have on small businesses in the region. Their brief addresses both the “inquiry” and “reliance” provisions and argues for an injunction of the entire ordinance because, in practice, even the use of past salary information constitutes speech.

The result of this first challenge to a salary history ban will have an impact across the country as other legislative bodies consider similar measures. While the constitutionality of the Philadelphia ordinance is under review, the inquiry concerning a candidate’s salary history information is one that may be best left unanswered until this legal issue is resolved.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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