UPDATE: Aug. 7, 2020: The City of Philadelphia announced Thursday that its Commission on Human Relations (PCHR) will begin enforcing the salary history ban on Sept. 1, according to a statement. Rather than appeal the ruling of the 3rd Circuit or seek a rehearing, the Chamber of Commerce for Greater Philadelphia "elected to collaborate with the City" by helping draft a guidance document and providing input on the PCHR's regulations, both of which were approved July 31, the City said.
"As a result of the global pandemic and the dramatic and negative impact that it has had on the business community, we are also very appreciative of the ample time that was afforded to develop a balanced approach via the regulatory process," Rob Wonderling, president of the Chamber, said in the statement. "It is our hope that the Wage Equity Ordinance will help in closing the gender pay equity gap, while at the same time not placing a difficult regulatory burden on the business community."
Dive Brief:
- The City of Philadelphia may enforce a 2017 law that prohibits employers in the city from inquiring about prospective employee's pay history or relying on pay history in determining wages, the 3rd U.S. Circuit Court of Appeals ruled Feb. 6 (Greater Philadelphia Chamber of Commerce v. City of Philadelphia, Nos. 18-2175 & 18-2176 (3rd Cir. Feb. 6, 2020)).
- The Greater Philadelphia Chamber of Commerce filed a suit individually and on behalf of some of its members seeking to enjoin the ordinance, alleging it infringed on the Chamber's freedom of speech and that of its members, per court documents. A district court agreed that one of the law's two components, the "inquiry provision," violated First Amendment rights and granted a preliminary injunction blocking the provision. The court allowed the "reliance provision" to stand.
- On appeal, the 3rd Circuit upheld the district court's approval of the reliance provision, but vacated the inquiry provision injunction. The appeals court said the district court applied a higher standard than was required in its analysis, and that the city had presented sufficient evidence to support the ordinance.
Dive Insight:
Stakeholders watched this case closely, viewing it as a test for salary history bans across the country. The ruling is a victory for equal pay advocates and a setback for the business groups challenging these laws.
In concluding that the law is "not more extensive than necessary," the 3rd Circuit noted that the ordinance does not prevent employers from obtaining wage market data from other sources and is more "narrowly tailored" than other, similar laws.
"At the end of the day, demographics and employee preferences are changing so quickly that in order to remain competitive in attracting talent, employers will have to move with the market," Rick Grimaldi, partner at Fisher Phillips, told HR Dive in an emailed statement. "Employers should be reviewing their hiring practices to eliminate the salary history question and focus on what a particular job may be worth."
Ongoing campaigns continue to urge governments and employers to address pay inequity in the U.S. Though exact numbers vary, sources have found that a pay gap between men and women persists despite its narrowing in recent years. One such finding comes from Pew Research Center, which found in 2018 that women earned 85% of what men earned. Such gaps can be even wider between men and women of color and their white counterparts, research shows.
Despite passage of the Equal Pay Act over half a century ago, some advocates say the results of pay equality efforts have been mixed at best. That hasn't stopped federal efforts to combat inequality in recent years, including the U.S. Equal Employment Opportunity Commission's addition of pay data reporting to EEO-1 forms. The future of that effort is now uncertain, however, as the agency did not renew its request to collect pay data after doing so for the 2017 and 2018 calendar years.
