On May 4, 2017, New York City joined the Commonwealth of Massachusetts and the City of Philadelphia when the Mayor signed legislation that bans employers from inquiring about the salary history of job applicants. These laws, which have the stated aim of reducing pay inequity along racial and gender lines, could have a wide-ranging influence on the way companies do business. The New York law is set to go into effect on October 31, 2017, although there is a possibility that the law’s implementation will be challenged, as the similar law has been in Philadelphia.
On April 6, the Philadelphia Chamber of Commerce filed a federal lawsuit alleging that the Philadelphia ordinance violates the freedom of speech of impacted businesses. The Chamber is also seeking injunctive relief to prevent the city from enforcing the law during the pendency of the litigation. In support of its motion for an injunction, the Chamber argued that the ordinance “violates the First Amendment by prohibiting employers from inquiring about, or relying on, an individual’s wage history and thereby communicating the message that wage history is important to the job-application process.” On April 18, the district court judge issued an order staying the ordinance’s effective date until after ruling on the preliminary injunction. Obtaining a preliminary injunction requires, among other things, a showing by the Chamber that there is a likelihood of the action’s success on the merits.
The court’s ruling on the injunction motion may foretell whether challenges to the New York City bill are likely. Like the Philadelphia bill, the New York City bill imposes an absolute prohibition on inquiries about any prospective employee’s wage history. In terms of a First Amendment challenge, the absolute ban on this particular category of speech is likely to lead the courts to engage in an exacting standard of review to determine the legality of the law. In order to meet such an exacting standard, bill proponents will need to demonstrate that there is no other way to achieve the goals sought by the legislation.
Regardless of potential challenges, employers should begin reviewing their employment applications and other staffing materials. Fisher Phillips will continue to monitor the laws and provide updates from our offices in New York City and Philadelphia.