Nicholas Fortuna, April 21, 2017

On April 6, 2017, Chamber of Commerce for Greater Philadelphia sued the City of Philadelphia to block the implementation of Philadelphia’s Wage Equity Ordinance, due to take effect in May. The Ordinance makes it unlawful for Philadelphia employers to ask about an applicant’s wage and benefit history to determine future wages. The law also prevents employers from retaliating against any candidate who fails to respond to a wage inquiry. This is the first legal action challenging a pay-history act. The action will consider how far governments can go in regulating commercial speech and may set up other cases against pay-history laws around the country.

The Chamber of Commerce asserts that Philadelphia’s ordinance violates the First Amendment of the U.S. Constitution. The action claims that the content-based and speaker-based restrictions on employer speech cannot survive court review.

The Chamber is arguing that the court should use the toughest standard of Constitutional analysis – strict scrutiny – because the limits the ordinance places on the all-important content and speaker communication violates the First Amendment right to free speech. The City will surely take the position that it is commercial speech which is subject to a lower level of review. The level of review chosen by the court will likely determine the outcome of the case.

The Supreme Court has established three approaches to analyze a statute to determine the constitutionality of the law. Strict scrutiny requires a compelling governmental interest that will be served by the legislation to pass muster. If the court applies a strict scrutiny analysis, the act will almost always fail to meet constitutional requirements. Under, intermediate scrutiny, the challenged law must further an important government interest by means that are substantially related to that interest. If the lowest level of review – rational basis – is used, the act usually survives.

The fight in this case will be around what level of review the court should use when considering the Philadelphia ordinance. Again, courts rarely find that any interest is compelling enough to justify a statutory restriction of a fundamental right. A lower level of scrutiny is used in circumstances where the rights effected are not considered as crucial.

Wage history has long been an essential tool in the hiring process. It identifies potential employees that employers can afford and helps formulate appropriate offers to applicants. According to Philadelphia (and other locations with similar laws), wage history should play no part in salary decisions because it only perpetuates gender-based wage disparities. 2015 U.S. Census Bureau data shows that women earn approximately 80 cents for every dollar their male counterparts earn.

Other states and cities with similar laws will likely be watching this case closely as its outcome will affect their validity. Massachusetts became the first place to enact pay-history legislation. New York City Council passed similar legislation which is awaiting the signature of the Mayor.


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