3rd Circuit Upholds Philadelphia Ban on Salary History Questions

Philadelphia employers can no longer inquire about an applicant’s salary history. A prior ruling which prohibited reliance on salary history when making an offer also remains enforceable. The 3rd Circuit Court of Appeals ruled last week that the City of Philadelphia may enforce the 2017 Wage Equity Ordinance, which had been partially blocked due to a preliminary injunction. The Court affirmed the denial of the injunction as to the Ordinance’s “Reliance Provision,” and reversed the granted injunction as to the Ordinance’s “Inquiry Provision.” The City of Philadelphia may now enforce both provisions.

In 2017, Philadelphia enacted the Wage Equity Ordinance, seeking to eliminate the wage gap for women and minorities through two separate provisions. The first, “Reliance Provision,” bans employers from relying on an applicant’s salary history when setting or negotiating a new applicant’s initial salary. The second, “Inquiry Provision,” bans employers from asking applicants about their salary history. The Greater Philadelphia Chamber of Commerce filed suit against the City, E.D. Pa. Case No. 17-01548 (E.D. Pa. April 6, 2017), alleging the ordinance violates the First Amendment, the Due Process Clause of the Fourteenth Amendment, the Commerce Clause, Pennsylvania’s First Class City Home Rule Act, and the state’s Constitution.  The Chamber of Commerce also sought an injunction enjoining the enforcement of the provisions pending the outcome of the proceedings. The Honorable Mitchell S. Goldberg in the district court denied the injunction as to the Reliance Provision, finding that it did not impact speech. However, Judge Goldberg found that the Inquiry Provision did infringe on protected speech and granted the injunction, noting that the City had not met its burden of proof under a heightened standard.

On February 6, 2020, the 3rd Circuit affirmed the District Court’s ruling that the Reliance Provision did not regulate speech and that the Chamber “has not shown a likelihood of success on the merits of its Constitutional challenge to this part of the Ordinance.” The 3rd Circuit further reversed the District Court’s determination on the Inquiry Provision, finding that the City had produced evidence sufficient to reasonably conclude that the Ordinance would help close the wage gap.

With the 3rd Circuit’s ruling, both provisions of the Ordinance remain in effect for now. In conformity with of this ruling, Philadelphia employers must refrain from asking applicants about their previous salaries and may not rely on information regarding an applicant’s previous salary when making an offer.

If you need help reviewing or revising your hiring procedures, please contact a Clark Hill Labor and Employment attorney.