The Philadelphia Commission on Human Relations has adopted regulations interpreting portions of a City ordinance, which if upheld, would prohibit employers from seeking applicants’ wage and benefits history.1 The Wage Equity Ordinance remains stayed pending resolution of litigation about its constitutionality.2 Nevertheless, any employer currently evaluating a comprehensive approach to state and local restrictions on salary history inquiries should review the regulations as part of the analysis.
On January 23, 2017, Philadelphia’s mayor signed the Philadelphia Wage Equity Ordinance, joining a growing number of jurisdictions restricting employers’ ability to seek prior wage history from applicants to set job salaries. The Ordinance was to be effective in May 2017. However, the Chamber of Commerce for Greater Philadelphia filed a lawsuit questioning the validity of the law and filed a motion for preliminary injunction to stay its effective date. Thereafter, the City of Philadelphia agreed to stay the effective date of the Ordinance pending resolution of the injunction motion. The parties and various interested parties (“amici”) continue to file briefs related to the injunction motion.
The City recently noted in a brief it filed that the Philadelphia Commission on Human Relations had adopted regulations interpreting the Ordinance (“Regulation No. 7”). As of this writing, the new regulations are still not available on the portion of the Philadelphia Commission on Human Relations’ website dedicated to its regulations, which employers may have previously reviewed to see if any guidance for the law had been published.3 The regulations are available, however, on the general page for City of Philadelphia Regulations (which also encompasses non-employment related regulations). Under City procedure, there was no public hearing held on the proposed regulations before they became effective because no one specifically requested one after the City posted a notice about the regulations in the legal notices section of local newspapers.
Regulation No. 7 addresses the following issues:
Definition of a Covered Employer and Applicant. The Regulation narrows the Ordinance’s coverage to those positions physically located within Philadelphia. Thus, presumably, employers based in Philadelphia with a multi-state presence do not have to comply with the Ordinance with respect to jobs located outside of Philadelphia, and a Philadelphia resident applying for a job outside of Philadelphia is not protected. Left undefined is exactly how to determine whether a job is located in Philadelphia or not—for instance, in the case of mobile workers.
Current Employees Applying for New Positions. The Regulation also notes that if an individual seeks a new position with the same employer, in setting the pay for that new position, the employer cannot rely on salary history that the employer may have obtained from the applicant in connection with the (old) initial application for employment.
Voluntary Salary Disclosures. The Regulation attempts to clarify when an applicant has “knowingly and willingly disclosed” prior salary information without unlawful coercion such that the employer can rely upon that information. It provides the following example: “a Prospective Employee ‘knowingly and willingly’ discloses the employee’s salary history in the context of an employment interview if the Prospective Employee voluntarily, and not in response to a question from the interviewer, makes the disclosure while knowing or having been informed that such disclosure may be used in determining any offered salary.” The Regulation does not, unfortunately, provide specific instructions or safe harbor language as to how an employer may adequately “inform” an applicant that disclosure “may be used in determining any offered salary” without being accused of coercing the disclosure.
Clarification on Permissible Inquiries. The Regulation states that “An Employer shall not include a question on paper or electronic employment applications asking Prospective Employees to provide their salary history at any previous position.” It does not specifically address whether a “disclaimer” directing applicants for Philadelphia not to answer is sufficient to meet this requirement. (In contrast, the City’s Fair Criminal Record Screening Standards Ordinance specifically states that disclaimers are insufficient to comply with the prohibition on employers seeking applicants’ criminal record histories). However, the Regulation does clarify that other inquiries relevant to salary for the position sought are permitted, such as “the applicant’s salary requirements or expectations, skill level and experience relative to the position for which the applicant is being considered.”
If the Philadelphia Wage Equity Ordinance is upheld, it will join the following jurisdictions in banning salary history inquiries:
The laws in these jurisdictions differ with respect to such key issues as whether salary can be set based on a voluntary disclosure, whether applicants can be asked about unvested equity or deferred compensation, and whether salary history can be verified post-offer. Please see the Littler publications, linked to above, for additional details.