A federal appeals court ruled earlier this month to uphold a law that bans employers from using previous salary to set wages. Doing so could help close the gender wage gap.
If employment practices continue as usual, the gender wage gap—globally, women are paid just 63% of what men earn, on average—would take more than 200 years to close, according to the World Economic Forum. Pay-equity advocates are hoping a new law in Philadelphia will help speed that progress.
Four years after Philadelphia became the first city in the nation to adopt legislation that prohibits employers using job applicants’ previous salary to set wages, the measure is finally set to go into effect—after a prolonged legal battle waged by the local chamber of commerce.
The Wage Equity Ordinance, unanimously passed by Philadelphia City Council in December 2016 and signed into law a month later by Mayor Jim Kenney, bans all employers and employment agencies hiring for positions within the city from inquiring about and relying on prior pay; applicants can still volunteer that information, and employers are allowed to question candidates about their salary requirements. Those who violate the law are subject to fines from the Philadelphia Commission on Human Relations.
Advocates of the law say that relying on a candidate’s prior salary perpetuates longstanding gender and racial inequities. Scores of studies demonstrate that women, and especially women of color, have traditionally been paid less than white men, so employers that set a starting salary based on a potentially already-unequal rate are continuing that cycle, said Women’s Law Project Managing Attorney Terry Fromson.
“Looking at prior pay is just reflective of historic discrimination,” she said. “It’s pretty clear that the pay gap is not going away, and we need to refine the tools we have to try to stop it, and the prior-pay ban is a very important one.”
Fromson co-authored an amicus brief to the U.S. Third Circuit Court of Appeals, which in early February handed down a precedential decision on the issue that paved the way for Philadelphia’s law to go into effect. The measure was halted in 2017 when the Greater Philadelphia Chamber of Commerce and 13 local businesses filed a federal suit, claiming it infringed upon their First Amendment rights.
The following year, a District Court judge issued a split decision that essentially halted the portion of the law banning employers from asking about salary history but allowed the provision prohibiting them from relying on prior pay to set wages to go forward. Both the chamber and the City of Philadelphia appealed, leading to the recent ruling—which found that both provisions of the law are constitutional.
The chamber does have the opportunity to appeal the decision to the full Third Circuit but has not filed such a motion yet—the recent decision was handed down by a panel of judges but, because it was “precedential,” it was reviewed by all members of the Third Circuit.
The Third Circuit was the first court in the nation to grapple with a First Amendment argument relating to prior-pay legislation, which could set the stage for progress elsewhere. Currently, 17 states and 19 other municipalities, including Pittsburgh, have enacted measures to prevent employers from using salary history to determine pay.
“Prior-pay ordinances have been adopted in a lot of cities and states across the U.S., so to now have a ruling that clearly states that you can ban employers from inquiring about or relying on prior pay is really big,” Fromson said. “This will be incredibly important to continued efforts at closing the wage gap.”
Judge Theodore McKee, who authored the Third Circuit ruling, wrote that the City of Philadelphia acted based on a “plethora of evidence” that preventing employers from questioning candidates about prior wages can help break the cycle of pay inequity. That’s a finding City Solicitor Marcel S. Pratt, who argued the case before the Third Circuit, said is a “significant victory not just for Philadelphia, but also for the national equal-pay movement.”
Kenney also commended the court’s action, noting in a statement that Philadelphia’s prior-pay ban is, “quite simply, the right thing to do.”
“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,” the mayor added.