After Massachusetts became the first state to pass a law restricting inquiries into an applicant’s wage history, Philadelphia is now poised to become the first city in the United States to do so.
On December 8, 2016, the Philadelphia City Council passed a bill that would amend the city’s Fair Practices Ordinance (“Ordinance”) to add a provision that would prohibit employers from inquiring about wage history. Mayor Jim Kenney is expected to sign the amendment into law in the near future. The amendment will take effect 120 days thereafter.
The amendment to the Ordinance is designed to address pay inequities affecting primarily women and minorities, as reflected in U.S. census data on wages. Many employers ask applicants about their pay history during the hiring process. However, using an applicant’s wage rate or salary with a prior employer to determine the pay offered to an applicant may perpetuate pay discrimination to the extent an applicant’s pay history was influenced (explicitly or implicitly) by unlawful bias.
The amendment would make it illegal for employers in the City of Philadelphia to inquire about wage history, require disclosure of wage history, condition employment on the disclosure of wage history or retaliate against an applicant for failing to respond to an inquiry about wage history. The amendment defines “inquiry” and “wages” broadly to effectuate its remedial purpose.
The amendment to the Ordinance includes two narrow exceptions. First, if an applicant knowingly and willingly discloses a prior wage to an employer, then the employer may rely on the applicant’s wage history in determining the wage for the position to which the applicant is applying. This exception likely will be construed narrowly by the city based on its interpretations of other Ordinances passed by City Council. Second, the Ordinance does not restrict an employer from inquiring about or otherwise using wage history if a separate federal, state or local law specifically authorizes the disclosure or verification of wage history for employment purposes.
The amendment to the Ordinance cites the similar legislation enacted in Massachusetts as influencing the City of Philadelphia to amend its Ordinance. As we reported in an earlier Duane Morris Alert, on August 1, 2016, Massachusetts became the first state to impose restrictions on employers from asking about pay history. Among other things, the Massachusetts legislation prohibits employers from seeking the salary history of any applicant, unless the applicant provides written authorization, and only after the employer has made an offer of employment with compensation. The Massachusetts legislation takes effect on January 1, 2018.
Other jurisdictions may soon follow suit. For example, the states of Pennsylvania, New Jersey, and California and New York City each have bills pending that would restrict employers from asking applicants about their pay history.
What This Means for Employers
Employers in Philadelphia should review their job applications, as well as their hiring and pay practices and procedures, to ensure compliance with the amendment to the Ordinance that is anticipated to be enacted imminently. For example, employers in Philadelphia should remove from their applications for employment any reference to wage history. If another law or regulation specifically authorizes employers to ask certain applicants about their wage histories, a separate application with an appropriate question consistent with those other legal requirements should be developed only for such applicant and the separate application should clarify that the questions are being asked by another law (ordinarily specifying what it is in the interest of transparency). Employers in Philadelphia may also wish to train hiring managers and others involved in the hiring process to communicate this change in Philadelphia law.
Additionally, all employers should consider this legislative trend banning inquiries about prior pay as part of a holistic assessment of potential pay gaps affecting women and minorities. Even in the absence of a law prohibiting employers from asking about salary information, employers may want to consider “banning the question” so that they do not perpetuate bias that has negative legal, business and human resources implications.
It is important to note that eliminating the question on salary may help avoid conscious or unconscious bias against older workers who have been paid more historically but are more than willing to work for less currently.