In a first-of-its-kind ruling, a federal judge in the Eastern District of Pennsylvania held that Philadelphia’s ban on questioning job applicants about their salary history violates the First Amendment’s freedom of speech clause.  However, the judge ruled the city could stop employers from using salary history to determine pay.

The City of Philadelphia (the “City”) enacted an ordinance targeting wage inequality that put women and minorities at a disadvantage.  The ordinance was signed into law on January 23, 2017 and was to take effect on May 23, 2017.  The ordinance contained two parts: an inquiry provision which prohibited an employer from asking about a prospective employee’s wage history, and a reliance provision which makes it illegal for an employer to rely on wage history to determine an employee’s pay.  In enacting the ordinance, the City claimed that allowing employers to formulate job offers based on historically lower salaries for women and minorities perpetuated the wage gap.

The Chamber of Commerce for Greater Philadelphia filed suit on behalf of itself and several of its members, arguing that both provisions of the ordinance violated the First Amendment’s free speech clause.  The Chamber sought a preliminary injunction to stop the ordinance from going into effect, which had already been delayed pending the lawsuit.

District Judge Mitchell S. Goldberg conducted a thorough constitutional analysis of each provision, tackling the inquiry provision first.  He initially determined the ordinance targeted commercial speech because “a wage history inquiry occurs in the context of negotiating a job.”  Next, he addressed what level of scrutiny to apply.  Because the ordinance could not pass muster under intermediate scrutiny, the Court did not need to determine whether strict scrutiny should apply instead of intermediate scrutiny.  The application of intermediate scrutiny turned on the determination of whether the ordinance advanced promoting wage equity, the governmental interest asserted.  Although promoting wage equity was not in dispute, the parties disputed the ordinance’s ability to advance that interest.

To pass constitutional muster, the City would need to show that the inquisition into wage histories perpetuated the wage gap and that the ordinance could close the wage gap.  However, the evidence presented by the City chiefly served to drive home the existence of the wage gap (not its cause), followed by conjecture that a ban on asking about salary history would diminish the wage gap.  It offered no empirical evidence to back up its claim, nor did its evidence “address the possibility that disparate wages could also be based on factors having nothing to do with discrimination.”  In its role of determining “whether the legislature had drawn reasonable inferences based on substantial evidence,” the Court found the evidence insubstantial.

Because the City could not show that prohibiting employers from asking about salary history would help alleviate the wage gap, it ran afoul of the First Amendment.  Therefore, the court struck down the provision.

Unlike the inquiry provision, the reliance provision was not subject to First Amendment scrutiny because it did not “implicate the spoken or written word.”  The Court rejected the Chamber’s argument that relying on an applicant’s wage history to determine their wage communicates that applicant’s value, bringing it under the umbrella of the First Amendment.  Likewise, the Court rejected the Chamber’s other constitutional challenges based on vagueness, due process, and the Commerce Clause.

Although the court struck down the ban on questions about an applicant’s salary history, employers in Philadelphia should tread lightly regarding applicants’ salary histories.  The law still prohibits relying on salary history, and an employer who asks about salary history may have a difficult time unhearing the answer and opens itself up to claims that it relied on that answer.

Since Philadelphia passed its salary history ban, other cities and states have followed suit.  New York City and San Francisco and the states of California, Delaware, Massachusetts, and Oregon are among those banning employers from inquiring into past wages.  Judge Goldberg’s opinion could set the stage for additional challenges to these bans throughout the nation.

The case is The Chamber of Commerce for Greater Philadelphia v. City of Philadelphia, et al., No. 17-cv-1548 in the Eastern District of Pennsylvania.  A copy of the opinion can be found here.

Troutman Sanders will continue to monitor developments in salary history bans.