Questions about Salary History Set to Become Taboo for Philadelphia Employers

Labor and Employment Alert

Action items: On December 8, 2016, the Philadelphia City Council unanimously passed an amendment to Title 9 of the Philadelphia Code that prohibits employers from inquiring into a candidate’s salary history during the application process. If a request for salary information is part of your employment application or standard interview questions, or if you base offers on prospective employees’ pay history, you may soon need to revise your hiring process. The new bill is awaiting signature by the mayor.

Many studies have concluded that the average American woman earns 79 cents for every dollar earned by a man—a 21 percent gap. While factors such as education, field of study, occupation, and experience may account for some of that gap, some studies have stated that there is an unaccounted for gap of five to nine percent between men and women’s average earnings. 

This “gender pay gap” has become a hot topic among employers, following a spate of high-profile lawsuits alleging gender-based wage discrimination against well-known corporations. Just this year alone, Microsoft, Qualcomm, Merck, KPMG, and Bank of America have all made headlines, thanks to wage discrimination lawsuits filed by female employees.

Lawmakers are starting to take notice. Earlier this year, in an effort to close the wage gap between men and women, Massachusetts became the first state to bar employers from asking about applicants’ salaries before offering them a job. Similar legislation is being considered in California and New York State. A federal bill revising the Fair Labor Standards Act to prohibit employers from discussing prospective employees’ salary and benefit history has also been introduced in the House of Representatives.

While a federal ban has little chance of becoming law in the foreseeable future, on December 8, 2016, the Philadelphia City Council voted unanimously to approve a prohibition on inquiries into wage history during the employment application process, citing gender pay disparity statistics and the example of Massachusetts. Under the bill, any Philadelphia employer will be banned from asking about a prospective employee’s wage history, requiring disclosure of wage history, or conditioning an interview or an offer on an applicant’s disclosure of wage history. 

Philadelphia employers will also be prohibited from relying on wage history to determine the wages for a prospective employee at any stage in the employment process, unless an applicant, without being asked, “knowingly and willingly disclosed his or her wage history.” Further, the bill contains a provision prohibiting employers from retaliating against any prospective employee who refuses to comply with a wage history inquiry. 

Philadelphia Mayor Jim Kenney has expressed support for the ordinance, but his office could not provide the date that he is expected to sign the bill into law. Once the bill is signed, it will go into effect after 120 days. In the meantime, Philadelphia employers should review their hiring practices to determine whether they will need to make changes to comply with this pending law. 

If you have any questions about the pending Philadelphia ordinance or would like further information on how the ordinance may impact your company, please contact Janet Lee or any member of Blank Rome LLP’s Labor and Employment practice group.