Philadelphia’s Salary History Ban Upheld

On February 6, 2020, the U.S. Court of Appeals for the Third Circuit ruled in favor of the City of Philadelphia, upholding the constitutionality of the City’s Wage Equity Ordinance under the First Amendment. The City may now enforce the Ordinance and prohibit employers from asking applicants about their salary history.

As one of the first jurisdictions to enact such a law, Mayor Kenney signed the Ordinance into law on January 23, 2017. The Ordinance made it unlawful for any business that employs individuals in the City of Philadelphia to ask applicants about their wage history (“Inquiry Provision”) or to rely on an applicants’ wage history to determine wages for the job for which the applicant applied (“Reliance Provision”).

After the Ordinance was passed, the Chamber of Commerce for Greater Philadelphia sued the City in the U.S. District Court for the Eastern District of Pennsylvania, contending the Ordinance violated employers’ First Amendment rights to ask applicants about their salary history. Specifically, the Chamber argued the City failed to provide sufficient evidence showing the Ordinance would actually close the wage gap. Thus, the Chamber argued, the City could not show that the speech restriction on employers actually furthered the government interest it asserted. The District Court agreed with the Chamber, granting a preliminary injunction in April of 2018 preventing the enforcement of the Inquiry Provision on First Amendment grounds. However, the Court upheld the Ordinance’s Reliance Provision.

On appeal, a three-judge Third Circuit panel unanimously held that the City was only required to show it had a reasonable basis for adopting the Ordinance, and not to present empirical evidence proving that the Ordinance would have the intended effect of eradicating pay bias. The Third Circuit thus held the City met its burden to show the Ordinance directly advanced its substantial government interest in closing the wage gap.

The Third Circuit’s decision has set an important precedent, as several other cities and states have passed similar legislation and more are contemplating passing such laws.

In Other News:

  • Maryland has passed a ban-the-box law. Effective February 29, 2020, Maryland employers of 15 or more employees are prohibited from asking about an individual’s criminal record prior to the first in-person interview. As with other ban-the-box laws, there are exceptions, such as where criminal history information must be sought to comply with other laws. Maryland’s state law does not pre-empt local ban-the-box laws, which are in place in Baltimore City, Prince George’s County and Montgomery County.
  • Pittsburgh’s paid sick leave law is FINALLY going into effect on March 15, 2020. The Mayor’s Office of Equity has published guidance to assist employers with compliance.
  • New Jersey has become the first state to pass a law requiring employers to provide covered employees with severance in the event of covered events, such as mass layoff, under amendments to the state’s mini-WARN law, which go into effect on July 19, 2020. Under the amendments, employers will be required to provide one week of severance per year of service to affected employees.
  • The Colorado Department of Labor and Employment has adopted new wage and hour rules that go into effect on March 16, 2020.  Under the new rules, many more Colorado employers are covered by the minimum wage order (employers in all industries are covered, rather than employers in specifically-enumerated industries), and the salary level for exempt employees is going up. Beginning on January 1, 2021, the minimum salary threshold for exempt employees in Colorado will increase to $40,500, and will continue to increase annually until it reached $55,000 on January 1, 2024, at which point it will be adjusted annually for inflation.