Third Circuit: Philadelphia Employers May Not Ask Applicants for Salary History

The U.S. Court of Appeals for the Third Circuit has lifted a prior injunction on Philadelphia's salary history ban, which prohibits employers from asking job candidates for their salary history during the interview process. The Court's decision, issued on Feb. 6, 2020, overturned the injunction issued by the U.S. District Court for the Eastern District of Pennsylvania in April 2018, which was issued on the basis that the law violates businesses' free speech rights.

After hearing extensive testimony, including testimony from a labor economist, the three-judge panel of the Third Circuit ultimately disagreed with the Eastern District of Pennsylvania's 2018 ruling and held that Philadelphia's reasons for restricting businesses' speech justify the salary history ban. "The city enacted the inquiry provision in an attempt to address this persistent problem and the record is clearly sufficient to withstand this First Amendment challenge to it," the Third Circuit panel explained.

Takeaways and Considerations

The Third Circuit's decision is being celebrated by proponents of diversity and inclusion efforts, as research has shown that salary history inquiries tend to suppress the wage potential of women and minority applicants. The decision also aligns Philadelphia with other progressive cities and states that have enacted similar laws in recent years, such New York, New Jersey and California, and has the potential to attract top talent to Philadelphia. Finally, the Third Circuit's decision may protect other jurisdictions' laws from the possibility of being overturned on the basis of First Amendment rights.

Holland & Knight attorneys have extensive experience advising organizations on legal compliance and best practices in hiring. For more information, contact the author or another attorney in Holland & Knight's Labor, Employment and Benefits Group.  

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.