Philadelphia Equal Pay Ordinance Aims to Curb Gender Pay Gap

Much has been reported about a new Philadelphia ordinance that makes it illegal for employers to ask job applicants about their salary history. But the ordinance goes beyond that simple sound bite. Reliance on salary history at any stage of the employment process is also prohibited, unless the applicant “knowingly and willingly disclose[s] his or her wage history….” And even then, the employer cannot limit employment or consideration for an interview to those applicants who disclose their salary history. The only general exception to these rules applies to actions taken based upon “federal, state or local law that specifically authorizes the disclosure or verification of wage history or employment purposes.”

Signed into law by Mayor Kenney on January 23, 2017, the ordinance will take effect on May 23. Its purpose is to help address the wage gap between men and women, especially women of color. The text of the ordinance notes that in Pennsylvania, women earn on average 21 percent less than men; Asian women earn 19 percent less; African American women earn 32 percent less; and Latina women earn 44 percent less than men. The ordinance does not directly address inequities in pay between some professions predominantly held by women and those held largely by men. The hope is that it will help to curb gender-based inequities within a particular field. As the text of the ordinance states, “[s]ince women are paid on average less than men, basing wages upon a worker’s wage at a previous job only serves to perpetuate gender wage inequalities ….”

While some employers complain that the new rule will hamper them in negotiating with prospective employees, that is not necessarily so. The presumption underlying the ordinance is that it will encourage employers, in setting wage rates, to place more emphasis on objective factors, such as the “going rate” for the type of work involved or for individuals with similar credentials in the relevant job market.

To union-represented workers, these are well-understood concepts. Collective bargaining agreements frequently set a uniform starting rates for positions in the bargaining unit. These rates are often pegged to the labor market, positioning the employer to attract and retain well-qualified employees. For employees whose contracts are established through interest arbitration, evidence about the wages paid by comparable employers to employees doing the same type of work is a key part of the parties’ presentation to the arbitrators.

Philadelphia is the first city to pass this type of ordinance. Massachusetts passed a similar state law in August, 2016. A number of states and cities in the northeastern United States are considering similar legislation.

On February 8 2017, the Pennsylvania Senate voted to approve a bill that would overturn the Philadelphia ordinance, and prevent other Pennsylvania municipalities from enacting similar laws. That bill now moves to the House of Representatives.

For more information about the potential impact of the Philadelphia ordinance, contact one of the Labor Law or Employment Law attorneys at Willig, Williams & Davidson at (800) 631- 1233.