You are interviewing a job applicant. He or she has duly informed you of his/her strengths, weakness, past experiences, etc. Things are going well. You sense the job applicant would be an excellent addition to your team. You are ready to talk turkey. So you ask what would seem to be the next logical question: “What is your current or prior salary?” No so fast.
Some employers use salary history to determine a new hire’s starting pay; or as a point of reference for salary negotiations; and/or as a means to evaluate an applicant’s experience and achievements. However, there is an emerging viewpoint that relying on salary history often results in the unintended consequence of perpetuating unequal pay between men and women.
Female job applicants are likely to have lower current or prior salaries than their male counterparts. According to City of Pittsburgh and City of Philadelphia ordinances, in Pennsylvania, women were paid 79 cents for every dollar paid to men.” (citing United States Census Bureau Report 2015). Accordingly, the “salary history” question can be viewed as resulting in women carrying lower earnings and pay discrimination with them from job to job. Moreover, it is well-documented that women are more likely to shoulder the lion’s share of caretaking responsibilities, which can result in women temporarily leaving the work force and/or being forced to reduce their work hours. Thus, salary history questions can deleteriously impact women as their last salary may not reflect current full-time market conditions.
To combat the perpetuation of unequal pay, many states and cities, including Philadelphia and Pittsburgh, have enacted ordinances prohibiting employers from asking prospective employees their salary history.
For example, effective, January 31, 2017, Pittsburgh enacted the following salary history ordinance (Pittsburgh Ordinance No. 2017-1121), which applies only to employment with the City of Pittsburgh as the employer:
The City [of Pittsburgh] shall refrain from the following:
1. Inquiring about an applicant’s wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history, or retaliate against an applicant for failing to comply with any wage history inquiry or for otherwise opposing any act made unlawful by this Section.
2. Relying on the wage history of an applicant from any current or former employer of the individual in determining wages for such individual at any stage in the employment process, including the negotiation or drafting of any employment contract, unless such applicant knowingly and willingly disclosed his or her wage history to the City.
The Philadelphia salary history ban, effective May 23, 2017, is broader than the Pittsburgh ordinance as it applies to all employers within the City of Philadelphia and not only to employment with the City of Philadelphia as the employer.
After the passage of the Philadelphia salary history ban, the Chamber of Commerce for Greater Philadelphia filed a lawsuit arguing that Philadelphia’s salary history ban violated the First Amendment. On April 30, 2018, the United States District Court for the Eastern District of Pennsylvania held that Philadelphia’s salary history ban, in part, violated the First Amendment’s free speech clause. The court held that employers must be allowed, under the First Amendment, to ask an applicant about his/her current or prior salary, as this question sometimes serves a legitimate purpose, e.g., identifying applicants whom an employer can and cannot afford. However, the court also upheld the section of the ordinance that prohibits employers in the City of Philadelphia from relying on this information to determine wages at any stage during the employment process.
Such a ruling is a head scratcher, and it is worth noting that it is pending appeal in the United States Court of Appeals for the Third Circuit. It is difficult to fathom a situation whereby an employer can demonstrate that it asked a prospective employee about his/her salary history but did not, even in some way, rely on it to determine wages. While this case only addressed the legality of the Philadelphia ordinance under the First Amendment, employers should tread carefully and consider whether asking salary history questions is worth the risk of a claim of gender discrimination in setting compensation.