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By: John McAvoy
More than a half-century after President JFK signed the Equal Pay Act, the gender pay gap is still with us. Women earn 79 cents for every dollar men earn, according to the Census Bureau. What will it take to bridge that stubborn pay gap? Well, some believe we can and will reduce the impact of previous discrimination by not asking new hires for their salary history. Several cities and states agree with this approach and have passed legislation that prohibits employers from asking questions about an applicant’s salary history. In the cities and states where such laws have been passed, they are not without controversy.
Philadelphia passed a similar law last year. In response, Philadelphia’s Chamber of Commerce, backed by some of Philadelphia’s biggest employers, including Comcast and Children’s Hospital of Philadelphia (CHOP), filed suit against the City of Philadelphia challenging the constitutionality of the salary history ban law, arguing the portion of the law that prevents companies from inquiring about an applicant’s wage history violated an employer’s free speech rights.
On Monday, April 30, 2018, the Eastern District of Pennsylvania made two rulings with respect to Philadelphia’s salary history ban law in the matter of Chamber of Commerce for Greater Philadelphia v. City of Philadelphia, docket no. 2:17-cv-01548-MSG (E.D. Pa. Apr. 30, 2018) (Goldberg, J.).
First, the court found that the law as written violated the First Amendment free speech rights of Philadelphia employers. In sum, the court’s ruling is that employers can ask salary history questions.
Second, the court upheld the ‘reliance provision’ of the salary history ban law, which makes it illegal to rely upon that wage history to set the employee’s compensation. This means that Philadelphia employers can ask salary history but cannot use it as a basis to set salary. The purpose of this is to encourage employers to offer potential candidates what the job is worth rather than based on prior salary which could have been set based on discriminatory factors.
There is a prevailing trend nationwide for salary history ban laws. To date, California, Delaware, Massachusetts, Oregon, Puerto Rico, New York’s Albany County, New York City, and San Francisco have enacted salary history ban laws, and at least 14 other states are considering following suit. Although we anticipate future and continued legal challenges, it seems likely that laws banning salary history inquiries will continue to gain ground, particularly in more progressive states or areas where the pay disparity directly impacts a large segment of eligible voters. As such, prudent employers should prepare themselves to address this new workforce right through smart planning and proper training of employees, including managers, supervisors and HR personnel responsible for ensuring a lawful hiring process.
Want to learn more about what Philadelphia’s salary history ban law means for your business? Let us help you by analyzing your hiring practices. Please call or email the employment experts and John McAvoy (215.789.4919 [email protected]).