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Philadelphia Faces Backlash Over Proposed Wage History Law - Will New York Follow Suit?

Posted by Bob Mather on June 06, 2017

Philadelphia is facing backlash over a proposed wage history law. Despite strong opposition, New York opted to sign a similar bill into law. Will New York face similar problems with their bill? Below we break down exactly what the bills cover, what the Philadelphia lawsuit is trying to fight, and what human resource managers can expect in the meantime.

Philadelphia’s Wage History Ordinance: What Does the Wage History Ordinance Do?

Exchange money for workThe Philadelphia Wage History Ordinance restricts employers in the state from obtaining wage history information for individuals they may wish to hire. Of course, this imposes difficulties for many human resource (HR) managers attempting to offer a reasonable salary to potential employees. The ordinance also:

  • Prevents employers from taking retaliatory action against any applicant that does not wish to sign a wage history inquiry.
  • Threatens court action against employers that do not follow the ordinance.
  • Provides a cause of action for prospective employees against employers in violation of the ordinance, and providing for damages including court costs, attorneys’ fees, penalties, and injunctive relief. 

New York City’s Similar Bill

A similar bill was also passed by the New York City Council, stating that employers cannot research the former salary history of an applicant unless that applicant offers up the information. The New York City bill covers a similar set of potential issues for HR managers wanting to inquire about a prospective employee’s wage history, including:

  • Prevention of HR managers to research salary history. 

Not only does this include contacting former employers, it also means HR managers cannot search public records about salary history, either. Furthermore, any other benefits or compensation collected by the applicant cannot be examined.

  • Salary history cannot be used to dictate the salary offered by the company. 

A prospective employee’s prior salary history cannot be used to gauge the employee’s potential compensation for work from the company. This means that benefits and other types of salary history cannot be considered. It’s only if the potential employee voluntarily agrees to disclose such information can HR managers then use the information to determine compensation. 

  • Employer and applicant can discuss salary in regards to the potential job position.

Details of the job offer and compensation can be discussed by the employer and applicant. . The employer can disclose the potential salary of the position, and the applicant can share an expected salary range. 

The Backlash in Philadelphia: Litigation

Since Philadelphia signed its Wage History Ordinance Bill into law, the U.S. District Court for the Eastern District of Pennsylvania ordered a stay. The reason for the stay has to do with whether or not the Ordinance, as argued by the city’s Chamber of Commerce, violates free speech rights for employers, granted by the First Amendment to the U.S. Constitution.

According to the Chamber of Commerce, the Ordinance:

  • Continues to harm the gender wage gap.
  • Does not seem to be written well enough to achieve its goal of protecting potential employees.
  • Does not provide enough help for applicants to allow for free speech restrictions. 
  • Violates the Fourteenth Amendment because of the employer penalties and fines that seem out of place with due process. 

The Ordinance also restricts anyone who does business with the state of Philadelphia but is not physically located within the state. However, the Chamber of Commerce believes that this violates the U.S. Constitution’s Commerce Clause, the Pennsylvania Constitution, as well as the Pennsylvania Home Rule Act. 

Enforcing the New York City Bill

The New York City Commission on Human Rights will regulated a similar bill in New York City. Any violation of the bill may result in fines of up to $125,000 for unintentional violations, and up to $250,000 for intentional violations. Additionally, employers may be liable to applicants for damages, including:

  • Compensatory damages
  • Back pay
  • Attorneys' fees

What Can NYC and Philadelphia HR Managers Expect?

In New York City and Philadelphia, employers need to make sure they review and revise their policies and hiring practices to eliminate questions regarding salary history and stay in line with the law. While this is particularly true in these states, HR managers in other states should be warned: more than 20 states are considering similar legislation. HR managers and employees should receive training to understand the new requirements under these laws, to avoid claims from applicants that you attempted to unlawfully obtain salary history. HR managers should also consider developing a process to document when applicants voluntarily share salary history.

Interested in learning more about hiring best practices? Start with background checks as the first step to smart business hiring.

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Topics: Lawsuit, wage

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