In December 2016 Philadelphia’s City Council passed a Wage Equity Ordinance (“Ordinance”) prohibiting employers from asking applicants for their salary history or to retaliate against a prospective employee for failing to answer such a question.  The law, which was to become effective May 23, 2017, has been stayed pending resolution of legal challenge by the Chamber of Commerce for Greater Philadelphia, alleging that the law violates employers’ First Amendment rights.

Nevertheless, on October 24, 2017, the Philadelphia Commission on Human Relations adopted a regulation  (“Regulation”) implementing the Ordinance. The Regulation seeks to clarify what employers may and may not ask and to further define which employers and applicants are covered by the Ordinance.

Covered Employers and Applicants

The Regulation specifies that the Ordinance the term “Employer” applies only to persons who are interviewing applicants with the intention of filling a position located within the City.

Prohibited Inquiries

Under the Regulation, an employer “shall not include a question on paper or electronic applications asking Prospective Employees to provide their salary history at any previous position.” The Regulation also prohibits employers from asking current employees seeking a new position (located in Philadelphia) about the employee’s wage history from any previous employer.

Permissible Inquiries

Employers may inquire into the applicant’s salary expectations, skill level, and experience relative to the position sought. In addition, employers may use voluntary salary history disclosures an applicant makes “knowingly and willingly” during an interview, provided it is not in response to a question from an employer.

Action Items

Although the Ordinance is currently on hold, employers with positions or offices in Philadelphia may nevertheless wish to prepare for the possibility that the law will become effective by:

  • Identifying jobs that are based in Philadelphia. This will be especially important for positions where an employee may work in more than one location.
  • Preparing a Philadelphia-specific employment application that removes any request for salary history.  The ordinance does not expressly state that it is sufficient to have an instruction on the employment application that directs Philadelphia applicants not to answer salary history questions.

Amid challenges regarding Philadelphia’s upcoming law prohibiting employers from requesting an applicant’s salary history, the City has agreed not to enforce the upcoming law until after the court has finally resolved the injunction request.

The law, which was set to become effective May 23, 2017, has been challenged by the Chamber of Commerce for Greater Philadelphia (the “Chamber”). The Chamber’s lawsuit alleges that the pending law violates the First Amendment by restricting an employer’s speech because, among other reasons, “it is highly speculative whether the [law] will actually ameliorate wage disparities caused by gender discrimination.” It is also alleged that the law violates the Commerce Clause of the U.S. Constitution, the Due Process Clause of the Fourteenth Amendment, and Pennsylvania’s Constitution as well as its “First Class City Home Rule Act” by allegedly attempting to restrict the rights of employers outside of Philadelphia.

On April 19, a judge for the Eastern District of Pennsylvania stayed the effective date of the law, pending the resolution of the Chamber’s motion for a preliminary injunction. Prior to resolving the injunction, the parties will first brief the court on the Chamber’s standing to bring the lawsuit. This issue, regarding whether the Chamber is an appropriate party to bring this lawsuit, will be fully briefed by May 12, 2017, before the law is set to become effective. However, there are several other issues to be resolved as part of the lawsuit. The City’s decision to stay enforcement of the pending law until all issues are resolved is intended to help employers and employees avoid confusion during the pendency of the lawsuit.

Although the City of Philadelphia will not enforce this law in the interim, employers with any operations in Philadelphia should review their interviewing and hiring practices in case the lawsuit is decided in favor of the City. Further, employers in Massachusetts and New York City will also be subject to similar restrictions on inquiring about an applicant’s salary history when those laws go into effect. Massachusetts’ law is scheduled to become effective in July 2018, and New York City’s law will become effective 180 days after Mayor de Blasio signs the law, which may occur as soon as this week.