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.