Salary History Inquiry Bans – Update on the Philadelphia Ordinance and Beyond

Update on the Philadelphia Salary History Inquiry Ban

Many employers have been wondering about the current status of the Philadelphia ordinance banning salary history inquiries. The United States District Court for the Eastern District of Pennsylvania recently addressed the Greater Philadelphia Chamber of Commerce’s challenge to the law, but its ruling may leave more questions than answers.

On April 30, 2018, the Eastern District struck the part of the law that prohibited employers from asking a prospective employee about their salary history, finding that it was a violation of the free speech clause of the First Amendment of the United States Constitution. However, the court left intact the portion of the law that prohibits employers from relying upon salary history in making hiring decisions. Therefore, although Philadelphia employers may ask about salary history, they are prohibited from relying upon it in making employment decisions.

The premise of Philadelphia’s law and similar laws in other jurisdictions is that salary history inquiries perpetuate a wage gap between men and women and between members of other protected classes and non-members, such as race-based wage gaps. The Eastern District found that insufficient evidence of this link had been presented. Nevertheless, employers are cautioned to tread lightly, because if they inquire about salary histories and are later challenged, they will have the burden of showing that any wage differential for protected class members is due to legitimate factors unrelated to their protected class status.

It is possible that one or both of the parties will appeal this ruling to the Third Circuit Court of Appeals, which may provide greater clarity. Until then, it is recommended that employers wishing to avoid liability remove salary history inquiries from their hiring process for Philadelphia employees.

Other Salary History Inquiry Laws to Consider

Philadelphia was the first major city to enact a salary history inquiry ban early last year. Since that time, other cities and states have followed suit, including California, Delaware, Massachusetts, Oregon, Puerto Rico, New York City and San Francisco.[1] New York State, Pittsburgh and New Orleans have enacted more limited salary history inquiry bans applying only to public employers.

Each jurisdiction’s law is somewhat different, making compliance for multi-jurisdictional businesses challenging. For example, in Delaware employers may be held responsible for an outside recruiter’s violation of the law, unless they have provided the recruiter with instructions on compliance. It is also uncertain at this time to what extent the court’s ruling on Philadelphia’s law will provoke similar challenges to and rulings on other jurisdictions’ laws.

Steps Employers Should Consider

In the meantime, some steps in general that employers should consider to reduce liability under the Philadelphia salary history inquiry ban and other salary history inquiry bans include the following:

  • Remove salary history inquiries from job applications and new hire paperwork.
  • Set pre-determined compensation ranges for positions based on the current value of each position in the marketplace and use uniform criteria other than salary history to determine where an applicant falls within that range, such as training, experience and unique skills.
  • Document in writing your communications with candidates and compensation decisions so that there is no dispute as to what was asked and relied upon in setting compensation.
  • Train those individuals who will be interviewing candidates and who will be responsible for hiring and compensation decisions on compliance with these laws.

If you have questions about how salary history inquiry ban laws may affect your hiring and employment practices, please contact Jennifer Ermilio or the Stevens & Lee attorney with whom you regularly work.

This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.

[1] Massachusetts’ and San Francisco’s laws are set to go into effect on July 1, 2018.