Challenge to Philadelphia Pay History Ordinance Dismissed, But Ordinance’s Future Remains In Doubt

By David J. Woolf

Last week, District Court Judge Mitchell Goldberg granted the City of Philadelphia’s Motion to Dismiss the Philadelphia Chamber of Commerce’s lawsuit challenging Philadelphia’s controversial new pay history ordinance. As we have discussed previously (see Here’s What that New Philadelphia ‘Pay History’ Law Means for Your Business and Philadelphia Wage Equity Ordinance On Hold … For Now), the ordinance would make it unlawful for an employer to inquire about a job applicant’s pay history and would severely restrict an employer’s ability to base a new hire’s initial pay on his or her compensation history. The ordinance had been scheduled to go into effect on May 23, but was stayed by Judge Goldberg, with agreement of the City, pending resolution of the City’s motion to dismiss the Chamber’s lawsuit challenging the ordinance.

Judge Goldberg’s decision is likely not the last word however, as it did not address the merits of the ordinance. Rather, the Court held that the Chamber, because of the way the lawsuit was worded, did not have standing to challenge the ordinance, and it gave the Chamber until June 13, 2017 to file an amended complaint to cure those deficiencies. The Chamber is now expected to do just that.

In the meantime, the question is whether and, if so when, Philadelphia employers need to start complying with the ordinance. Despite the fact that Judge Goldberg’s decision, in dismissing the Chamber’s lawsuit, arguably lifted the stay, the City announced the following position through a spokesperson:

If the chamber files an amended complaint that cures the standing defects identified by the court, the city will adhere to its agreement not to enforce the order until the chamber’s motion for preliminary injunction is resolved. If no amended complaint is filed within the period stipulated by the court, the city will begin taking steps to enforce the ordinance….

Given this statement, we believe that the best approach is for Philadelphia employers to continue to prepare to comply with the ordinance, but to hold off on implementation until we see what the Chamber does between now and June 13. If, as expected, the Chamber files an amended complaint, we will be back to playing the waiting game for a little while longer.

We will continue to provide updates as developments occur.

Philadelphia Wage Equity Ordinance On Hold … For Now

By Alexa E. Miller and David J. Woolf

Earlier this year, Philadelphia became the first city to pass a law prohibiting employers from inquiring about a job applicant’s wage history and restricting their ability to consider wage history in setting new employee compensation. The pay equity ordinance was enacted to halt the perpetuation of gender discrimination in compensation practices.

As has been widely reported, the Philadelphia Chamber of Commerce filed a lawsuit on April 6, 2017 to challenge the ordinance, which was scheduled to go into effect on May 23, 2017. The Chamber also filed a motion for a preliminary injunction, asking the Court to enjoin the enforcement of the ordinance while its lawsuit is pending, on the grounds that the ordinance violates businesses’ free speech rights under the First Amendment and is unconstitutionally vague.  The City of Philadelphia’s apparent first response has been to question whether the Chamber of Commerce even has standing to bring a lawsuit challenging the ordinance.

On April 19, Judge Mitchell Goldberg issued an order temporarily staying the enforcement of the ordinance until he can decide the Chamber’s preliminary injunction motion. Briefing on the standing issue will extend until at least May 12, with the Court’s decision on standing and possibly additional briefing related to the ordinance itself to follow.  Thus, it is unlikely that the ordinance will go into effect on May 23 as originally planned.

Although Philadelphia employers may be tempted to delay implementing changes to their hiring practices, we recommend that they remain alert and ready to comply. Legislation restricting employers’ ability to rely on a job candidate’s wage history in setting compensation is the latest trend in equal pay laws.  We predict that this trend will continue to gain momentum in other cities and states across the country.  Most recently, the New York City Council passed similar legislation amending the New York City Human Rights Law to prohibit employers from inquiring about an applicant’s wage history, which Mayor de Blasio is expected to sign shortly.  Prudent employers should review their hiring practices (e.g., update job applications and train managers about appropriate interview questions) and be prepared to comply with the law if the Chamber’s challenge is unsuccessful.

Additional background about the ordinance is available here.  We will continue to monitor the status of Philadelphia’s wage equity ordinance and update this site as developments occur.