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.

Here’s What that New Philadelphia ‘Pay History’ Law Means for Your Business

David Woolf wrote an article for the Philadelphia Business Journal titled, “Here’s what that new Philadelphia ‘pay history’ law means for your business.” Philadelphia will likely become the first city in the nation to ban employers and employment agencies from asking job applicants for their salary history or requiring disclosure of such information. The Philadelphia City Council unanimously approved the bill on December 8; if enacted as expected, the new law will go into effect 120 days after the Mayor signs it. David discusses what this new bill means for local businesses.

Dave notes that the ordinance would also make it unlawful for an employer to base their compensation offer on an applicant’s prior salary unless the applicant knowingly and willingly discloses their salary history to the employer. The new law is meant to lessen the wage gap earnings between white males and women and minorities, but has been met with some controversy. The Philadelphia Chamber of Commerce has openly opposed the bill, stating that the legislation “goes too far in dictating how employers can interact with potential hires.”

Though Philadelphia has previously enacted legislation prohibiting or limiting certain questions that it considers “out of bounds,” this restriction is arguably different in that employers regularly use salary information in the hiring process. Dave highlights that while the inquiries may have unintended consequences, they can also add value, such as gauging an applicant’s assertions regarding their level of authority and responsibility in their current position, their advancement history and potential for future advancement, and a general sense of the applicant’s market value.

Dave advises employers to notify and train those involved in the hiring process of the anticipated ordinance, update their job application materials as needed and develop additional tools to still to get at the information needed. He also advises employers to look as the issue of pay equity more broadly.

Read “Here’s what that new Philadelphia ‘pay history’ law means for your business.”