Constitutionality of Philadelphia’s Salary History Ban Appealed to Third Circuit

The constitutionality of the Philadelphia ordinance aimed at regulating employers’ requests for and reliance on salary histories has been appealed to the U.S. Court of Appeals for the Third Circuit.

Both the City of Philadelphia and the Chamber of Commerce for Greater Philadelphia appealed U.S. District Judge Mitchell Goldberg’s decision to grant in part and deny in part entry of a preliminary injunction, issued at the end of April. In the 54-page opinion, Judge Goldberg held that the ordinance’s provision banning an employer’s inquiry about an employee’s prior salary violated the First Amendment, but he upheld the ordinance’s prohibition against the use of that information to set rates of pay.

While Judge Goldberg applauded the intent behind the ordinance, he found the City had failed to present sufficient evidence to support its argument that discriminatory pay is perpetuated by an employee’s disclosure of his or her prior wages to a subsequent employer.

The parties each filed their notices of appeal on May 25, 2018. For details of Judge Goldberg’s Opinion and Order, see our article, Philadelphia’s Salary History Inquiry Ban Violates the First Amendment, Federal Court Rules.

This case potentially implicates the state and local salary history bans that have recently passed around the country.

Jackson Lewis attorneys will continue to monitor this case closely and are available to counsel on the potential implications of the First Amendment challenge to Philadelphia’s ordinance.

 

Connecticut Bans Inquiries into Applicants’ Wage and Salary History

Connecticut is the latest state to prohibit employers from asking prospective employees about past compensation. Effective January 1, 2019, employers may not ask (directly or through a third party) about a prospective employee’s wage and salary history unless the prospective employee volunteers the information. Click here to read our full article regarding Connecticut’s salary history ban.

Vermont Bans Inquiries into Job Applicants’ Salary and Benefit History

Beginning July 1, 2018, employers in Vermont will be prohibited from requiring a prospective employee to disclose his or her salary and benefit history before making an offer of employment, with compensation, under legislation (H.B. 294) signed by Governor Phil Scott on May 11, 2018. Click here to read our full article regarding Vermont’s salary history ban.

Philadelphia’s Salary History Inquiry Ban Violates the First Amendment, Federal Court Rules

Philadelphia’s ban on salary history inquiries violates the First Amendment, a federal district court in Philadelphia has ruled in a 54-page opinion. The Chamber of Commerce for Greater Philadelphia v. City of Philadelphia et al., No. 17-1548 (Apr. 30, 2018). Because the decision is based on the First Amendment, it has broader implications for salary history inquiry bans passed by various state and local governments.

The case arose from a City of Philadelphia wage equity ordinance. The ordinance has two parts: a prohibition against inquiring about pay history, and a prohibition against relying on pay history in setting pay. Phila. Code §§ 9-1131. The prohibitions are necessary, the City argued, because allowing employers to set starting pay based on prior salaries perpetuates the pay gap resulting from historically lower pay for women and minorities. Phila. Code § 9-1131(1)(a) (citing United States Census Bureau Report 2015). Companies found in violation of the ordinance face civil and criminal penalties.

The Chamber of Commerce for Greater Philadelphia, on behalf of itself and several members, brought a civil action in federal court in the Eastern District of Philadelphia seeking to enjoin implementation of the ordinance on First Amendment grounds. The Chamber argued that the ordinance violates employers’ free speech rights.

U.S. District Judge Mitchell S. Goldberg of the Eastern District of Pennsylvania agreed that the salary history inquiry prohibition violates the First Amendment and enjoined implementation of that portion of the ordinance. He wrote, “I conclude that the city’s inquiry provision violates the First Amendment. Although the ordinance represents a significant positive attempt to address the wage gap, the First Amendment compels me to enjoin implementation of the inquiry provision.” The court noted that wage history information could be used for many lawful purposes, such as gathering market data, and not solely as a basis for determining future salaries.

However, the court ruled that the prohibition against relying on prior pay in setting starting salaries does not have First Amendment implications. The court rejected the argument that the reliance prohibition communicates a message about wage history and held that the prohibition does not regulate speech.

This decision is likely to prompt similar First Amendment challenges to other recently enacted pay history inquiry bans across the country.

Our Jackson Lewis Pay Equity Resource Group is available to assist with interpretation of current laws and counsel on the potential implication of law changes for employers.

New Jersey Governor Signs Equal Pay Bill

New Jersey Governor Phil Murphy signed the Diane B. Allen Equal Pay Act into law on April 24, 2018. The Act will take effect on July 1, 2018. The new law contains sweeping changes to the New Jersey Law Against Discrimination (LAD), including a prohibition against discrimination with respect to compensation or financial terms of employment, a six-year statute of limitations, and treble damages for violators. For details of the Act, see our article, Double Take: New Jersey Governor Poised to Enact Equal Pay Act.

Jackson Lewis attorneys are available to assist in identifying and addressing any pay disparities before the Act takes effect.

New York State’s Latest Push to Broaden Salary History Ban

New York Governor Andrew M. Cuomo continues his push to address the gender pay gap in New York. The latest is the release of a Department of Labor report commissioned by the Governor that recommends legislation barring all employers, public and private, from asking or searching for prospective employee’s salary history.

In January 2017, the Governor signed two Executive Orders taking aim at the use of salary history to set wages for state employees and employees of state contractors:

“We will advance women’s rights and equal pay by adopting salary history blind hiring practices and requiring all state contractors to report employees’ gender and pay.”

  • Executive Order #161 Will Prohibit State Entities from Evaluating Prospective Candidates Based on Prior Wage History
  • Executive Order #162 Will Require State Contractors to Disclose Gender, Race, Ethnicity, Salary of all Employees to Drive Transparency and Progress Toward Wage Equity

In particular, Executive Order 162, which took effect in June 2017, requires state contractors to provide job title and salary data for each employee working on a state contract, or the job titles and salaries of all contractor employees if the contractor cannot identify the specific employees working directly on the contract. State contractors can learn more about their salary reporting obligations under Executive Order 162 here.

Based on the April 2018 report from the Department of Labor, the Governor is supporting legislation to expand the salary history inquiry ban to private employers. Significantly, the Report recommends passage salary history ban that:

[p]rohibits all employers, public and private, who do business in New York State from asking prospective employees about their salary history and compensation. In addition, bar employers from searching public records to discover this information. If women are already being paid less for working the same jobs and being just as productive as men, this will halt the compounding nature of the gender wage gap to cover all public and private employers doing business in New York State.

A pending bill broadly prohibits all employers from:

  • Relying on salary history in determining a prospective employee’s wages;
  • Requesting salary history information from prospective employees, employees, and current or prior employers;
  • Refusing to interview, hire, or promote a prospective or current employee based on salary history; and
  • Retaliating against a prospective or current employee for declining to provide salary history or who has filed a complaint alleging a violation of these prohibitions.

This follows increasing scrutiny on the use of salary history in setting starting pay all across the country, including a number of state and local laws banning salary history inquiries. For more information and to track compliance with salary history bans, please follow our blog.

Localities and the Salary History Ban: Next Stop, Westchester County, New York

New York’s Westchester County is the latest locality to adopt legislation prohibiting employers from asking prior salary histories of a prospective employee. Click here to read our full article regarding Westchester County’s salary history ban.

NJ Governor Poised to Enact Equal Pay Act

On April 24, 2018, New Jersey Governor Phil Murphy plans to sign the Diane B. Allen Equal Pay Act (the “Act”) into law. Senate Bill S-104, reintroduced in this legislative session, contains sweeping changes to the New Jersey Law Against Discrimination (LAD), including, among other items, a prohibition against discrimination with respect to compensation or financial terms of employment on the basis of a protected trait, a six-year statute of limitations, and treble damages against any business that violates the Act. Click here to read our full article regarding the NJ Equal Pay Act.

Salary History Not a Defense against Equal Pay Act Claims, According to 9th Circuit

Prior salary alone or in combination with other factors cannot justify a wage differential between male and female employees under the Equal Pay Act, the U.S. Court of Appeals for the Ninth Circuit has held in an en banc decision. Click here to read our full article regarding the 9th Circuit’s decision.

In Time for Equal Pay Day, Report Indicates Wage Gap Persists in Nearly Every Occupation

The National Women’s Law Center (NWLC) has published a report based on the most recent U.S. Census Bureau data showing that women earn 80 cents for every dollar paid to their male counterparts across 97% of occupations.

The report finds the wage gap is due in part to the fact that women are overrepresented in low-wage jobs, and underrepresented in high-wage jobs. Even when comparing women and men in the same occupations, the report finds women are still paid less than men doing the same jobs in nearly every sector of work.

In low-wage jobs, such as waitresses, waiters, janitors, maids, and childcare workers, women make 71 cents for every dollar paid to men. In higher-wage occupations, such as lawyers, engineers, and physicians, women make 75 cents for every dollar paid to men in the same occupations. This report analyzes the wage data across occupations without reference to geography, experience, or other potential non-gender related reasons for the pay gap.

NWLC uses this data to calculate the day each year that women have to work to make what men did in the previous 12-month calendar year, commonly referred to as “Equal Pay Day.” This year, Equal Pay Day will be on April 10.

The Jackson Lewis Pay Equity Resource Group will keep you informed on this and related informational initiatives.

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