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Federal Court Dismisses Chamber of Commerce’s Injunction Against Philadelphia’s Wage Equity Law
5/31/17
The Philadelphia Chamber of Commerce’s effort to halt the implementation of Philadelphia’s new wage equity law has been dismissed – for now.
By way of background, Philadelphia is at the forefront of increased legislative measures across the country designed to combat wage equity issues. In December of 2016, the Philadelphia City Council passed an ordinance making it unlawful for employers to (1) inquire about a prospective employee’s wage history, and (2) rely on a prospective employee’s wage history in determining that individual’s wages unless the employee “knowingly and willingly discloses” such information. Similar legislation was passed in Massachusetts in 2016 and Oregon last week.
The Philadelphia ordinance was set to go into effect on May 23, 2017. However, the Philadelphia Chamber of Commerce filed a Complaint and a Motion for Preliminary Injunction in the United States District Court for the Eastern District of Pennsylvania on April 6, 2017. In response, the City filed a Motion to Dismiss, arguing that the Chamber of Commerce did not have legal standing to challenge the ordinance. The City agreed to temporarily halt the effective date of the ordinance pending the Court’s decision.
Proponents of the City’s ordinance assert that basing a worker’s wages on her previous salary serves to perpetuate gender wage inequality. The Chamber asserts that the ordinance violates the constitutional rights of its members without meaningfully advancing the City’s interest in eliminating gender discrimination wage disparities. The Chamber further states that the language of the ordinance is overly broad and vague, thereby making it unduly burdensome on employers. In its Motion for Preliminary Injunction, the Chamber stated that the ordinance would be less restrictive and constitutional if it allowed wage history inquiries, but prohibited employers from using wage history as the sole determination of a worker’s salary.
On May 31, 2017, the Court held that the Chamber of Commerce lacks standing to challenge the City’s ordinance. The Court did not address the merits of whether the ordinance passes constitutional muster. However, that issue may still be decided on another day. The Court’s holding was predicated on the fact that the Chamber did not identify a member who would suffer specific harm from the Ordinance. The Court has allowed the Chamber fourteen days to file an Amended Complaint, and there is also the possibility of an individual business filing a similar Complaint.
Philadelphia employers should be aware of this litigation and the possibility of the ordinance taking effect this summer. Violations of the ordinance can result in compensatory damages, punitive damages, fines, and even imprisonment.
For any questions, please contact Chris Curci at ccurci@fmglaw.com.
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