Judge throws out lawsuit against Philadelphia pay equity law

Dive Brief:

  • A federal judge rejected a lawsuit filed to block Philadelphia’s new pay equity law. Judge Mitchell S. Goldberg tossed out the Chamber of Commerce of Greater Philadelphia’s lawsuit because the filling cited no business that could be harmed by the law, Philly.com reports.
  • Goldberg granted the chamber 14 days to file an amended complaint. In his summary, the judge wrote that the chamber hadn’t met the burden of showing how the law would harm any one of its members, and that he was throwing out the case without prejudice.
  • Philadelphia delayed implementing the law on May 23, when it would have taken effect, until the judge issued a ruling. City officials are sticking to the agreement until the chamber files an amended complaint listing specific businesses the law would negatively impact, says Philly.com.

Dive Insight:

Philadelphia was the first U.S. city to pass a pay equity law, which bans employers from asking job candidates about their salary history. Earlier this month New York City also signed a pay equity law. Similar legislation has passed at the state level, including in Massachusetts and California. Proponents of pay equity laws argue that women’s life-long earning capacity is short-changed when employers base current salaries on past earnings. The question of salary and gender is complicated. A recent study by ADP found that not only does a gender pay gap persist in base pay, but it extends also to variable pay such as bonuses.

Most business organizations, especially chambers of commerce, oppose pay equity laws. Their argument is that these and other seemingly pro-labor laws are “burdensome” for companies. And some have argued that asking about pay saves recruiters time.  

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Questions of pay equity also carry a compliance risk. Beginning in March 2018, the Equal Employment Opportunity Commission is slated to start requiring employers with 100 or more employees to report pay information by race and gender. The goal of the new requirement is uncovering wage discrimination and may force employers to think more deeply about pay scales, not just for women but for workers of color as well.

In the current anti-regulatory environment, nothing is certain, but employers need to track what happens in this space. Regardless of the federal moves, cities and states may continue to enact their own regulations aimed at pay equity, which could create a confusing compliance patchwork for employers. More broadly, employers need to evaluate on an individual level if the arguments against pay equity laws and regulations hold water or whether taking a proactive stand on these issues could attract more talent or boost workforce engagement.

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Comp & Benefits


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