Philadelphia’s Wage History Ordinance, initially scheduled to take effect on May 23, 2017, remains on hold. The Ordinance has been subject to a federal court stay pending resolution of a lawsuit for a preliminary injunction brought by the Chamber of Commerce for Greater Philadelphia. The City of Philadelphia agreed to halt enforcement of the Ordinance pending the litigation’s outcome. Following a motion to dismiss filed by the City, the court dismissed the lawsuit on May 30. Thereafter, on June 13, the Chamber filed an amended complaint.

The Ordinance

The Ordinance prohibits employers in Philadelphia from inquiring about the wage history of prospective employees. It was passed unanimously by the Philadelphia City Council in December 2016 and signed into law by Mayor Jim Kenney on January 23, 2017. (For more on the Ordinance, see our articles, Philadelphia to Restrict Wage History in Hiring Decisions, Business Group Challenges Constitutionality of Wage History Ordinance, Philadelphia Wage History Law Subject to Temporary Court Stay, Court Dismisses Lawsuit Challenging Philadelphia Wage History Law, and blog post, Philadelphia Mayor Signs into Law Legislation to Ban Inquiries into Wage History.)

The Ordinance makes it an unlawful employment practice “for an employer, employment agency, or employee or agent thereof” to “inquire about a prospective employee’s wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history.”

It also includes an anti-retaliation provision, prohibiting employers from taking adverse action against an applicant or employee who does not comply with a wage history inquiry.

Employers who fail to comply with the Ordinance can be subject to a private court action once administrative remedies are exhausted. Employers found in violation of the Ordinance would face compensatory and punitive damages, attorneys’ fees, court costs, injunctive relief, and administrative penalties.

The U.S. District Court for the Eastern District of Pennsylvania ordered the stay on April 19. Following briefing by the parties, the court issued an order dismissing the complaint on May 30, concluding that the Chamber did not have standing to bring the lawsuit on behalf of its members. The court noted the Chamber failed to identify a single specific member who would be harmed by the Ordinance. The court, however, dismissed the case without prejudice and granted the Chamber leave to amend the Complaint within 14 days.

The Amended Complaint

The Chamber continues to argue the Ordinance suppresses the free speech rights of employers in violation of the First Amendment to the United States Constitution. The Chamber of Commerce for Greater Philadelphia v. City of Philadelphia and Philadelphia Commission on Human Relations, No. 2:17-cv-01548 (E.D. Pa. June 13, 2017). The Chamber contends the Ordinance only “indirectly” addresses the gender wage gap, the legislation’s prohibitions are not narrowly tailored to achieve its overall goal, and there is no substantial basis for restricting speech. The amended complaint further alleges the employer penalty provisions, which allow punitive damages, fines, and criminal penalties, violate the Due Process Clause of the Fourteenth Amendment. In addition, the Chamber continues to challenge the geographic reach of the Ordinance, which ostensibly applies to any employer doing business in Philadelphia. The Chamber argued generally that because the Ordinance regulates activity that may occur outside of Philadelphia, it violates the U.S. Constitution’s Commerce Clause, the Pennsylvania Constitution, and the Pennsylvania Home Rule Act.

The amended complaint includes a number of new allegations as well. In response to the court’s dismissal of the initial complaint on standing grounds, the Chamber now identifies a number of its members — businesses within the City — it claims will be harmed by the Ordinance. The Chamber argues that certain minority-owned businesses will be negatively affected by the Ordinance, that the Ordinance will hamper the ability of these businesses to recruit and hire top talent. National companies with a significant presence in Philadelphia also are identified by name as businesses likely to be harmed.

State Preemption

On a separate front, the Wage History Ordinance continues to face the threat of preemption from the state legislature, where the Pennsylvania Senate has passed a bill to amend the Commonwealth’s Equal Pay Law. Significantly, as written, the bill does not prohibit wage history inquiries, but it contains a preemption clause prohibiting local ordinances on the subject.

Implications for Employers

Other localities to have passed laws banning inquiries into salary history include Massachusetts, Oregon, Puerto Rico, and New York City. (See our articles, Massachusetts Governor Signs Tough Pay Equity Bill, Oregon Enacts Expansive Pay Equity Law, Puerto Rico Enacts Equal Pay Law, Prohibits Employers from Inquiring about Past Salary History, and New York City Council Approves Legislation Limiting Prospective Employers’ Ability to Obtain and Use Salary History Information.)

Employers with operations in Philadelphia should continue to prepare for the new obligations and potential penalties by reviewing their policies and practices to ensure compliance with the Ordinance.