On April 30, 2018, a Philadelphia federal judge issued an opinion striking down a portion of Philadelphia’s salary history ban. Salary history bans have become increasingly common tools used by various cities and states around the country attempting to combat wage disparities that exist across genders, races, and ethnicities. The Philadelphia law consists of two parts: (i) an inquiry provision, which addresses employers asking candidates about their salary history; and (ii) a reliance provision, which makes it illegal for companies to rely on salary history in making hiring decisions. The law, like many others around the country, provides punitive penalties for employers who violate the law, and harsher penalties for repeat offenders.
Judge Goldberg’s ruling struck down the inquiry provision on First Amendment grounds, but upheld the reliance provision. As a result, employers face an interesting dilemma. Philadelphia employers are permitted to ask about an applicant’s salary history, but they are prohibited from relying on that information when determining wages or offering employment.
Even though the decision struck down part of the law, it may still be prudent for Philadelphia employers to refrain from asking applicants about their salary history. Any employer that asks candidates about their prior salary history during the hiring process might have a more difficult time proving that (i) it did not consider the salary history information during the hiring process, and (ii) any wage disparity that exists between protected classes was the result of permissible reasons, not due to past salary information.
Although this decision only affects Philadelphia employers, as more of these laws become enacted across the country, more will face challenges in court. Many of the decisions will turn on different factors, but other judges may look to Judge Goldberg’s ruling for guidance. We’ll be sure to keep you up to date on the legal trends of the salary history bans, as well as any appeal that may result from this immediate decision.