For over fifty years, federal legislation has prohibited wage discrimination based on gender. Specifically, the Equal Pay Act of 1963 requires equal pay for equal work performed by men and women working in the same establishment. Despite the federal protections for pay equity, there remains an obvious wage gap between men and women. Although women make up nearly half of the work force, a 2015 study conducted by the Institute for Women’s Policy Research found that female full-time workers made only 80 cents for every dollar earned by men.

Recently, municipalities and states have sought to address the gender wage gap by introducing equal pay laws (with varying success) that prohibit employers from asking applicants about their salary history. Philadelphia will soon become the first city to adopt such “wage-gap” legislation.

Influenced by the passage of a state-wide wag-gap law in Massachusetts earlier this year, Councilman-at-Large Bill Greenlee sponsored the Wage Equity ordinance, a bill that would amend the Philadelphia Fair Practices Ordinance to prohibit employers from asking about an applicant’s wage history at any stage in the hiring process. On December 8, 2016, City Council unanimously passed the Wage Equity ordinance and the mayor’s office has publicly signaled its approval and inevitable signing of the bill into law. Once signed by the mayor, the ordinance will go into effect in 120 days.

The purpose of the Wage Equity ordinance is to address historical inequities faced by minorities, women and, in particular, women of color, in the fight for equal pay for equal work. In 2015, the U.S. Census Bureau reported that in Pennsylvania African American women were paid only 68 cents to the dollar paid to men, while Latinas were paid only 56 cents to the dollar paid to men.

By banning inquiries into salary histories, the ordinance seeks to prohibit the perpetuation of wage inequality by ensuring that job applicants, who may have been victims of the historically lower wages generally offered to women and minorities, will not be plagued by unequal wages throughout their careers.

Prohibitions

Under the Wage Equity ordinance, it is an unlawful employment practice for an employer, employment agency or employee/agent of an employer/agency to:

  • Ask a job applicant, in writing or otherwise, about his or her wage history;
  • Require disclosure of wage history;
  • Condition employment or consideration for an interview on the disclosure of wage history;
  • Retaliate against a job applicant for failing to disclose his or her wage history; or
  • Rely on a job applicant’s wage history from a current or former employer to determine the wages for that individual at any stage of the employment process.

Exceptions

The Wage Equity ordinance contains very few exceptions:

  • An employer may utilize wage history if an applicant knowingly and willingly discloses his or her wage history to the employer, employment agency or an employee/agent of the employer/agency; or
  • An employer may utilize wage history where a federal, state or local law specifically authorizes the disclosure or verification of wage history for employment purposes.

The Wage Equity ordinance is broad in scope and, once enacted, will fundamentally change how both job seekers and employers approach salary negotiations. Job seekers in Philadelphia will no longer have to prepare artful responses to the dreaded salary question. Meanwhile, employers will have to rethink how to set competitive wages.

In preparation for compliance, employers should review and revise their employment applications to remove any questions about wage history. Additionally, employers who still want flexibility in setting wages should conduct an internal audit of the positions and salary ranges within their company and set new hire salary goals prior to beginning the recruiting/interview process. In light of the express policy statement of the Wage Equity ordinance, employers should make salary offers based upon factors other than an applicant’s prior earnings, such as the job responsibilities, position sought, qualifications and market competition.