Philadelphia Salary History Ban

March 17th, 2020 | Angela Preston, Senior Vice President and Counsel, Corporate Ethics and Compliance with Ryan Hannan, Compliance Associate

The Journey from 2016 to 2020

On February 6, 2020, the United States Court of Appeals for the Third Circuit upheld Philadelphia’s Wage Equity Ordinance (the “Ordinance”).[1] The Ordinance, which provides amendments to Title 9 of the Philadelphia Code to restrict inquires and considerations of applicants’ compensation histories, was passed by City Council in December 2016 and signed by Mayor Kenney the following January. It was then stayed due to a court challenge by the Philadelphia Chamber of Commerce, which argued that it infringed on employers’ rights to free speech. After both parties appealed a district court ruling, the Third Circuit ruled in favor of the City.

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Effective Date Awaited

The initial iteration of the ordinance aka Philadelphia Salary History Ban was set to become effective in May 2017, but the City has yet to confirm the new effective date following the subsequent events. The Ordinance will apply to all employers and employment agencies with 1 or more employees who do business in the City, and prospective employees who are considered for a position located in the City. Notably, the definition of “wages” is broad, and applies to all earnings and compensation.

Prohibitions and Exceptions

The Ordinance prohibits the following acts:

• Inquiring about or requiring disclosure of a prospective employee’s wage history
• Considering unwilfully or unknowingly disclosed wage history as a condition of employment
• Retaliation against prospective employees for failing to comply with prohibited requests or requirements
• Determining wages based on previous wage history, unless such information was willfully and knowingly disclosed

Exceptions provided by the Ordinance include only cases when such inquires, disclosures, or considerations are pursuant to state, federal, or local laws which specifically authorize wage history disclosure or verification.

Philadelphia joins a growing list of state and local jurisdictions enacting what are colloquially referred to as “Salary History Bans”, “Wage History Ban”, or “Pay Equity Laws,” which are intended to bridge wage gaps for women, and racial and ethnic minorities by basing salary offers on the position sought in lieu of prior compensation. Philadelphia employers, or those who hire within the City, should consult with their legal counsel regarding their current hiring and salary determination practices.

The full text of the Ordinance can be found here.

Our compliance experts always keep a finger on the pulse of regulatory updates that can impact your hiring processes. Which is why our customers rely on us to stay ahead of the compliance curve. Click to read a customer story where our customers from BioRefrence Laboratories shares her experience of Sterling’s compliance expertise.

[1] Greater Philadelphia Chamber of Commerce v. City of Philadelphia, No. 18-2175, 2020 WL 579733 (3d. Cir. Feb. 6, 2020).

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