Philadelphia Becomes First U.S. City to Prohibit Inquiries into Applicants’ Wage Histories

On January 23, 2017, Philadelphia Mayor Jim Kenney signed into law the “Wage History Ordinance,” which bans all employers doing business in Philadelphia from asking job applicants about their wage histories, subject to a few exceptions. The Ordinance, unanimously passed by the Philadelphia City Council on December 8, 2016, amends Chapter 9-1100 of the Philadelphia Code, the “Fair Practices Ordinance.” The new law, the first for a U.S. city, will take effect on Tuesday, May 23, 2017.

The Wage History Ordinance specifically prohibits employers from the following:

  • To inquire about, require disclosure of, or condition employment or consideration for an interview on the disclosure of a potential employee’s wage history, unless done pursuant to a “federal, state or local law that specifically authorizes the disclosure or verification of wage history for employment purposes;”
  • Determine a potential employee’s wages based upon his/her wage history provided by his/her current or former employer, unless the potential employee “knowingly and willingly” disclosed such information to the prospective employer; and/or
  • Take any adverse action against a potential employee who does not comply with a wage history inquiry (anti-retaliation provision).

For purposes of this Section 9-1131, “to inquire” shall mean to “ask a job applicant in writing or otherwise,” and “wages” shall mean “all earnings of an employee, regardless of whether determined on time, task, piece, commission or other method of calculation and including fringe benefits, wage supplements, or other compensation whether payable by the employer from employer funds or from amounts withheld from the employee’s pay by the employer.”

Notably, the exception allowing wage history inquiries where a law “specifically authorizes” such applies not only when the inquiry is required by law, but when it is merely permitted by law.

The new law also requires a prospective employee who alleges a violation of the Ordinance to file a complaint with the Philadelphia Commission on Human Relations within 300 days of the alleged discriminatory act before he/she may file a civil action in court. Violations of the Ordinance can result in an award of injunctive or other equitable relief, compensatory damages, punitive damages (not to exceed $2,000 per violation), reasonable attorneys’ fees and hearing costs.

Advocates of the legislation, like Philadelphia Councilman Bill Greenlee, have suggested that the Ordinance is aimed at reducing the gender wage gap.  According to the “Findings” section of the Ordinance, women in Pennsylvania are paid 79 cents for every dollar that a man earns.  Amongst minorities, it claims that African-American women are paid 68 cents, Latinas are paid 56 cents, and Asian women are paid 81 cents for every dollar paid to men.  The belief is that, since women have historically been paid less than men, an employer’s knowledge of applicants’ wage histories can perpetuate a cycle of lower salaries.  Advocates profess that the Ordinance forces prospective employers to, instead, set salaries based on an applicant’s experience and the value of the position to the company.

Opponents of the Ordinance, like Rob Wonderling, CEO of the Chamber of Commerce for Greater Philadelphia, denounce it as an unnecessary “hassle” driving businesses away from Philadelphia.  Corporations like Comcast have also threatened costly lawsuits contesting the legality of the Ordinance.

It is recommended that employers review their hiring practices and applications for employment in advance of the Wage History Ordinance’s effective date of May 23, 2017.  Moreover, anyone involved in the hiring and interview process must be trained to ensure compliance with the new law prohibiting inquiries into an applicant’s salary history.

For more information on the Wage History Ordinance, how it may affect your business, or ways to ensure that your company’s hiring documents and policies comply with the Ordinance, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Your Credit is No Good Here: Philadelphia Becomes Latest Jurisdiction to Make It Unlawful to Use Credit Information in Employment

On June 7, 2016, Philadelphia Mayor Jim Kenney signed into law Philadelphia Bill No. 160072, which amends Philadelphia’s “Fair Practices Ordinance: Protections Against Unlawful Discrimination,” Chapter 9-1100, et seq. of the Philadelphia Code.  Employers comprised of one or more people are covered by the Ordinance, which, as amended, prohibits an employer from procuring, or seeking a person’s cooperation or consent to procure, credit information regarding an employee or applicant in connection with hiring, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment.  Philadelphia’s Ordinance follows other several other jurisdictions, including New York City, which have enacted similar laws.

The ordinance does provide some exceptions to its anti-discrimination provisions, which guide businesses seeking to utilize credit information in lawful ways.  These exceptions include allowing business to seek credit information if the information must be obtained pursuant to state or federal law, or if the specific job the employer seeks employee credit information for:

  • requires the employee to be bonded under City, state, or federal law;
  • is supervisory or managerial in nature and involves setting the direction or policies of a business or a division, unit or similar part of a business;
  • involves significant financial responsibility to the employer, including the authority to make payments, transfer money, collect debts, or enter into contracts, but not including handling transactions in a retail setting;
  • requires access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction; or
  • requires access to confidential or proprietary information that derives substantial value from secrecy.

However, if an employer relies on the credit information either in whole or in part when considering adverse action in these instances, it must disclose its reliance thereon and provide the particular information upon which it relied. Employers are also required to give the employee or applicant a chance to explain the circumstances prior to making an adverse decision.

Employer Takeaways: 

  • Employers should evaluate their hiring and internal employment processes to ensure it complies with the new ordinance and with the federal Fair Credit Reporting Act (and local iterations).
  • If a credit check is done in certain circumstances, the employer should disclose its reliance and should allow for any explanation or clarification on behalf of the employee or applicant.

For more information regarding the potential impacts of this legislation or how your business can prepare to develop a compliant credit-check policy, please contact Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com or 973-533-0777.