In a unanimous, precedential opinion issued yesterday, a three-Judge Panel of the Third Circuit Court of Appeals reversed in part a District Court holding, which had enjoined enforcement of that part of a Philadelphia Ordinance which prohibits Employers from making inquiry (the “inquiry Provision”)  of job applicants about their wage history or using that history (the “Reliance Provision”)  in making hiring decisions. The goal of the Ordinance is to close the wage gap between what women (especially minority women) and men make in similar occupations. The Ordinance was the first of its kind in the U.S. and, so far, the first to be subject to federal appellate review.  

The Ordinance was challenged on First Amendment Grounds by the Philadelphia Chamber of Commerce. The District Court upheld the Reliance Provision of the Ordinance, but enjoined enforcement of the Inquiry Provision on the ground that it did not satisfy “intermediate scrutiny” of speech regulating laws applicable to commercial speech. The Third Circuit panel disagreed, and reversed the injunction permitting the City to now enforce the Inquiry Provisions of the Ordinance. 

The Ordinance makes it unlawful “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.” The Ordinance also makes it unlawful for an employer to retaliate against a job applicant for failing or refusing to provide wage history information. 

Applicants for employment may voluntarily disclose wage history to a prospective employer, and an Employer may use that information if it is “knowingly and willingly disclosed.” This created issues that Employers should be prepared to address. An applicant aware of the Ordinance going into the hiring process may voluntarily disclose wage history and, if not hired, later claim he or she was required or coerced into providing it or refused to do so when asked and denied the job on the basis of the disclosure or refusal to disclose. Accordingly, Employers should take several steps to assure both compliance with the Ordinance and a firewall against bogus claims that could be hard to refute.  This includes:

1. Ensuring that all job postings and advertisements contain a statement that the Employer will not solicit wage history information, discourages applicants from voluntarily disclosing such information, and that the Employer will not use such information in making employment decisions.
2. Amend any job application forms to remove all wage history inquiries.
3. Assure that all contracts with job referral sources obligate the source to make similar written statements to all job applicants.
4. Train those who participate in the hiring process to not make any such inquiries and, if wage history information is volunteered, to immediately inform the applicant that such information will not be recorded nor used in the hiring process. Wage history information should not be recorded in any fashion. Interviews, whether in person or over the phone, Skype, etc., should involve at least two employer representatives where possible. 
5. Keep all records of the hiring process for each applicant for at least 350 days following the hiring decision to permit expiration of the limitations period, plus time to receive any notice of a claim.    

The Ordinance does not prohibit wage inquiry where permitted by a federal, state or local law that specifically authorizes inquiry about wage history.  A violation of the ordinance subjects Employers to penalties that may be imposed by the Philadelphia Commission on Human Relations on a complaint filed within 300 calendar days after the alleged violation. Remedies include injunctive relief, compensatory and punitive damages, attorneys’ fees, and costs.

If you have questions, or would like additional information, please contact Bob Small, Partner in Reger Rizzo & Darnall’s Employment Practices Group,  at 215.495.6541, or via email at rsmall@regerlaw.com.

This newsletter is designed to keep you up-to-date with changes in the law. For help with these or any other legal issues, please contact Reger Rizzo & Darnall LLP.  The content of this newsletter is intended solely for your informational purposes. It does not constitute legal advice, and it should not be relied on without a discussion of your specific situation with an attorney.