If you're an employer in Philadelphia, then you better be careful when you interview a prospective employee.
Right now, thanks to a Federal court ruling earlier this year, you're still within your constitutional rights to ask that candidate about his or her salary history. But you can't base the salary you're offering on that information. The ruling came when the Philadelphia Chamber of Commerce sued the city after an ordinance was passed in 2017 that banned employers from asking a prospective employee about salary history.
That decision is being appealed and now there's a new twist. Last week the National Federation of Independent Businesses — a national trade group representing more than 12,500 businesses in Pennsylvania, along with both the Pennsylvania Chamber of Business and Industry and the U.S. Chamber of Commerce — joined together to file an "amicus" brief to support the Philadelphia Chamber's appeal (an amicus brief is a legal document filed by non-litigants with a strong interest in the subject matter).
The ordinance puts "a stranglehold on small business owners trying to determine what constitutes a competitive offer in a very tight job market," Karen Harned, executive director of the NFIB Small Business Legal Center said in a press release. "There are less harmful ways to address pay equality without hurting small city businesses, such as encouraging employers to perform audits to determine if employees are fairly compensated for equal work."
Business groups are never thrilled when governments pile on restrictions that restrict business activities, particularly ones on hiring, and this one is especially irritating because of today's tight employment environment.
The ordinance is meant to protect against wage discrimination by deterring employers from basing a starting salary on a previous wage history which could be inequitably lower. Given that a study released last week suggests that some female workers make as little as 49 cents on the dollar compared to men, the ordinance is certainly pertinent. But the issue remains debatable. Other analysts blame the wage gap on factors such as hours worked, marital status and number of children and not necessarily gender discrimination.
Because of all the confusion, many employment experts are advising their clients to just avoid the question of salary history altogether. But why all the fuss?
"Past salary history doesn't really come up when I'm considering a job candidate," one client told me. "We just pay what we pay, and it's usually based on the market." Other clients I asked informally echoed that sentiment. Of course, there are the few that may take advantage of a candidate's prior salary history to lowball a wage, and I guess that's the motivation for this regulation. But this is definitely not the norm.
Across the board, my clients look to industry data, worth-of-mouth and compensation sites like Salary.com, Glassdoor and PayScale when determining a candidate's salary. Smart candidates I've met also do their homework. They are not afraid to negotiate based on their market value rather than dwell on the past. In fact, stating dissatisfaction with below-market pay as one of the significant reasons for a job change demonstrates a confidence to a future employer of a candidate's self-worth and a confidence in their abilities.
Regardless of an employer's approach, the issue is unlikely to be resolved anytime soon. "This is the first case that I am aware of where a court has considered the constitutionality of the salary history ban." Pepper Hamilton LLP's Tracey Diamond told the Inquirer back in May. "I suspect that lawsuits in other jurisdictions will follow and, if the courts rule the other way, this eventually could lead to a Supreme Court showdown someday."