Federal Appeals Court reinstates Philadelphia’s ban on salary history questions

The U.S. Court of Appeals for the Third Circuit reversed a district court’s preliminary injunction on Feb. 6 that prohibited the City of Philadelphia from banning employers from asking for job applicants’ salary history. 

The law known as the Philadelphia Wage Equity Ordinance was passed on Jan. 23, 2017 in order to help close the wage gap for women, people of color and members of the LGBTQ community. But the Chamber of Commerce for Greater Philadelphia sued the City in federal court, stating that the Ordinance violated the First Amendment and seeking preliminary injunctive relief. In April 2018, the federal district court granted a preliminary injunction and ruled that the First Amendment prohibited the Ordinance’s ban against employers. The district court, however, upheld the Ordinance’s provision prohibiting employers from relying on or using salary history information when making salary offers. Both the City and Chamber of Commerce appealed the ruling and on Feb. 6, the City of Philadelphia walked away with a win. 

Rue Landau, executive director of the Philadelphia Commission on Human Relations (PCHR) and the Fair Housing Commission (FHC) and an out lesbian said, “Every aspect of the LGBTQ community is affected by the wage gaps. It affects women, people of color, and sadly it affects trans people of color the most. They are the hardest hit.”

A longtime advocate for the Wage Equity Ordinance, Landau submitted testimony in support of the bill in 2016 when it was introduced. Her testimony says, “A factor in continuing gender and racial wage gaps, is the practice of asking an applicant’s wage history during the hiring process so that an employer can use the information to set the salary for the job the applicant is seeking. Setting pay based on an applicant’s past wages perpetuates wage inequality, low wages, and poverty. It directly affects women, people of color, disabled people, immigrants, and members of the lesbian, gay, bisexual, and transgender community, who are disproportionately underemployed and underpaid.”

A 2015 study from the Williams Institute indicates with the elimination of a gender wage gap, the poverty rate for women in same-sex couples would fall from 7.9 percent to 5.4 percent; eliminating the racial wage gap for African American men in same-sex couples would result in poverty rates falling from 14.5 percent to 10.9 percent, and for African American women in same-sex couples from 24.7 percent to 16.9 percent. Reducing the sexual orientation wage gap for men in same-sex couples would reduce their poverty rate from 3.3 percent to 2.2 percent. 

While transgender wage gap statistics are less available, the Williams Institute reports 15 percent of transgender people report making less than $10,000 a year, a rate of poverty that is nearly four times that of the general population. 

Landau said, “The most important thing is that employers need to set a value on a job and hire the best person for it, and that is what will allow individuals in our community to be successful and to thrive and to make every aspect of our community even stronger, because if women, people of color, trans people and trans women of color are held back, then our whole community can’t move forward. This is an incredible law for our community and to fight poverty in Philadelphia.”

Landau said employers hold salary information “close to their chest,” and it’s hard to imagine how greatly this will impact our community. 

“Hopefully, this will have a pretty quick effect on people being paid the amount that they are worth and the amount that they deserve for the jobs they are doing,” she said.

“You hear all of these anecdotes of people who say they are not being paid enough and then also folks who find out that they are not being paid enough,” Landau added. “People do talk about their salaries at some point, and when they start talking, other people find out they’re not being paid as much as their colleagues or as much as they’re worth.”

In a statement, Mayor Jim Kenney said, “Taking steps to ensure that women and people of color are paid the same as their white male counterparts will have significant social and economic benefits. It is, quite simply, the right thing to do.”