Prohibiting Salary History Requests: A New Trend in Equal Pay Laws?

Philadelphia employers will no longer be able to ask job applicants about salary history under an ordinance (Bill No. 160840) that Mayor Jim Kenney signed into law on Jan. 23.

The measure, effective May 23, makes Philadelphia the latest jurisdiction to combat pay discrimination by imposing limitations on the way employers use workers’ salary histories to set compensation. Massachusetts included a ban on salary history queries as part of a sweeping equal pay law that was signed Aug. 1, 2016. Also in 2016, California addressed salary histories in an amendment to its existing equal pay law.

The idea behind wage history laws is that pay inequality can follow people. If workers experience pay discrimination in the course of their careers, disclosing past salary details will most likely put them at a disadvantage down the road when negotiating subsequent compensation packages. In other words, once a disparity in compensation is introduced, it can reduce a person’s earning power across an entire career.

Like the Massachusetts law, which takes effect July 1, 2018, the Philadelphia ordinance aims to end the cycle of pay discrimination by prohibiting employers from inquiring about or requiring applicants to provide information on past compensation. It bars employers from relying on applicants’ wage history to set their salary, unless applicants voluntarily offer up that information, and prohibits retaliation against applicants who refuse to disclose their wage history.

The ordinance isn’t without its critics. Cable giant Comcast Corp., headquartered in Philadelphia, was among the businesses that spoke out against the measure, urging the mayor not to sign it and warning of legal challenges. The Greater Philadelphia Chamber of Commerce said the measure will hamper business recruitment and chill economic growth. "With this bill, we have reinforced our unfortunate anti-business reputation," Chamber President and Chief Executive Officer Rob Wonderling said in a statement Jan. 23.

Some would argue that the salary history restrictions adopted by Philadelphia and Massachusetts are overly stringent, especially as compared with the softer approach California has taken. Rather than prohibiting employers from asking about past compensation, California’s amended pay bias law states that salary history alone can’t justify a pay disparity.

With awareness increasing about the connection between salary histories and pay inequities, employers should pay attention to the issue even if they’re not operating in California, Massachusetts or Philadelphia.

Remember, you’re not immune to legal risk just because you uniformly request salary histories, regardless of race, gender or other protected class status. Employers can face liability for discrimination in the absence of intentional bias if they implement neutral policies or practices that disproportionately harm employees or applicants who are members of a protected class.

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