©2023 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 3 damages, costs, and reasonable attorney’s fees.12 The California law also extends—from two years to three—an employer’s obligation to maintain records of wages and pay rates, job classifications, and other terms of employment.13 Under the California Fair Pay Act, employers may not prohibit employees from disclosing or discussing their own wages or the wages of others, or from aiding or encouraging other employees to exercise their rights under the law.14 The New York law includes a similar provision. These anti-pay secrecy requirements echo similar prohibitions under the National Labor Relations Act, the California Labor Code, and an Executive Order that applies to federal contractors. C. Pay Transparency And Other State And Local Initiatives In addition to more robust enforcement provisions, as described above, a number of states and local jurisdictions have also begun to experiment with other pay equity initiatives. Those have generally come in the form of salary history bans and pay transparency laws. Salary history bans generally prohibit or limit employers’ ability to gather information about a candidate’s past salary and/or use that information when making compensation decisions. Pay transparency laws generally require employers to provide pay range information about particular positions to applicants or to include those ranges in job postings. Some of the more onerous laws even require employers to submit reports of demographic and pay data to state agencies. What those state agencies will do with such information is not public knowledge. But some speculate it could be used to target employers for enforcement activity. State and local salary history bans generally prohibit employers from requesting the salary history of job applicants and limit their ability to consider prior salary when making offers to new hires. Those laws have sometimes been vigorously opposed by various business groups. On February 6, 2020, the U.S. Court of Appeals for the Third Circuit decided Greater Philadelphia Chamber of Commerce v. City of Philadelphia,15 which rejected a number of arguments claiming that those bans infringed on free speech. The lawsuit involved the 2017 Philadelphia Wage Equity Ordinance, which, among other things, prohibits employers from inquiring into or relying upon job applicants’ prior wage history in establishing starting pay. The ordinance consisted of two provisions: the “Inquiry Provision” and the “Reliance Provision.” The Inquiry Provision prohibits an employer from asking about a prospective employee’s wage history, and the Reliance Provision prohibits an employer from relying on wage history at any point in the process of setting or negotiating a prospective employee’s wage. Both provisions were upheld by the Third Circuit. Among other things, the court agreed that solving the gender pay gap is a substantial government interest and that the ordinance directly advances that interest.16 The court found that the City Council relied upon sufficient testimony and studies to support the enactment of the Ordinance, including that: (1) the wage gap is substantial and real; (2) numerous experiments have been conducted, which controlled for such variables as education, work experience, and academic achievement, still finding a wage gap; (3) researchers have long attributed the gap to discrimination; (4) existing civil rights laws have been inadequate to close the wage gap; and (5) witnesses who reviewed the data concluded that relying on wage history can perpetuate gender and race discrimination.17 This decision is significant because it upheld the ordinance based on many of the same arguments and analysis that support the rationale for salary history bans generally, including the alleged scientific bases of the gender pay gap and the purported failure of existing anti-discrimination legislation to address that issue. If the Third Circuit’s decision is a guide to the future, salary history bans will continue to be a key factor in employers’ hiring decisions. In addition to salary history bans, some states and localities have recently begun enacting legislation that requires employers to be more transparent about compensation. Those laws come in a variety of forms, 12 Cal. Lab. Code § 1197.5(h), (i). 13 Id. § 1197.5(e). 14 Id. § 1197.5(k)(1). 15 Greater Phila. Chamber of Commerce v. City of Phila., 949 F.3d 116 (3d Cir. 2020). 16 Id. at 143. 17 Id.
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