Comcast Has a Point on Pay Equity Bill

In early December, City Council unanimously approved a pay equity bill sponsored by Councilman Bill Greenlee that would prevent employers from asking prospective employees what they’ve earned in the past.

The bill’s objective is to curb discrimination during the hiring process, particularly for women and minorities. The bill cites women in Pennsylvania as earning 79 cents for every dollar a man makes, with women of color being paid even less. And herein lies the heart of the bill: An employer’s reliance on an applicant’s wage history to determine future payment may perpetuate discrimination.

Though Mayor Kenney has signaled his support for the bill, he has yet to sign it, and a January 26th deadline is looming.

And a threat from Comcast and the Greater Philadelphia Chamber of Commerce may be causing the delay. Though the two presented little opposition to the bill when it was first introduced in November, Greenlee told Philadelphia magazine, they came down hard in opposition this week. They allege that the bill violates employers’ free speech, and, if passed, would create a bureaucratic hassle for businesses and present the city as being even more “anti-business” than it already is.

While it’s still left to be seen whether Mayor Kenney will sign the bill as is, Rutgers-Camden law professor Stacy Hawkins, an employment law expert, says Comcast has a point. Though the city tried to model the pay equity bill after a similar Massachusetts bill that was widely accepted, Hawkins argues that there’s a big difference between the two bills that may be rubbing the business community the wrong way. Even so, she argues that pay equity legislation is absolutely necessary. Below, Hawkins evaluates Comcast’s arguments against the bill and speculates why some in the business community may have doubts.

You say there’s a difference in language between Philadelphia’s pay equity bill and the Massachusetts pay equity bill that was passed in August 2016. Can you explain the difference you see between the two?

Yes, the Philadelphia bill is actually quite different than the Massachusetts bill, which is what might be causing opposition.

The Philadelphia bill, Section 9-1131(2)(a)(i), has an absolute prohibition on employers inquiring about any prospective employee’s wage history. They just cannot ask.

The corresponding provision of the Massachusetts law, Section 105A.(c)(2), actually doesn’t go that far. It just prohibits an employer from requesting or requiring that the prospective employee provide wage history as a condition or consideration of their employment. Basically, the employer can’t make the employee provide their wage history. The employer can’t say “We won’t consider you for this position if you don’t give us salary information.”

While this may be a distinction without a difference, as I imagine the practical effect is going to be indistinguishable, I suspect that this is what Comcast’s legal counsel and the Chamber of Commerce have seized upon in terms of a First Amendment challenge.

So what does the First Amendment challenge mean for City Council?
It means that their bill is a regulation of the employer’s speech, and it is true that there is a very high burden of proof they’ll have to meet in order to extend this regulation. In fact, it would be subject to the highest standard of review we have for determining whether or not government legislation or action is permissible.

If City Council passes the bill as is, and Comcast moves forth with a lawsuit, will it be impossible to meet the First Amendment standard?
No, it’s not impossible. But it’s a very high standard, and it would depend on whether or not there are some pretty significant interests that City Council was trying to achieve with this and that there was no other way for them to accomplish this without burdening the employer.

Given that many of the other laws directed toward the same issue of pay equity are drafted in a way that is not as restrictive as the Philadelphia law, I’ll say again that it will probably be a difficult standard to meet, but I won’t speculate about whether they would win or lose if this wound up in litigation.

Do you think the wage bill is necessary?
If the bigger question is about whether pay equity legislation is necessary and whether we need to have some kind of policy response to the gender pay gap, absolutely.

For decades it has been well-established and well-acknowledged that there is a gender pay gap. Even though we’ve had legislation prohibiting pay discrimination since the 1960s, we still have women being paid approximately 80 cents for every dollar a man makes.

It is high time that we really put our nose to the grindstone to come up with effective policy and legislation to prevent that part of the gender pay gap that is attributable to discrimination. Because we know some parts of it aren’t attributable to discrimination. Others reasons are the fact that women tend to be concentrated in lower wage jobs, and women tend not to work as much overtime and as many hours.

But still, the portion of the gap that is attributable to discrimination needs some type of policy response.

Comcast has argued that the bill would create a bureaucratic hassle for businesses and further present Philadelphia as being “anti-business.” Can you evaluate this argument?
I teach employment law, so I can tell you that every proposed employment regulation, and quite frankly any regulation of business, is always said to ostensibly have the effect of driving business away. But I suspect that that is not always and unequivocally true.

The extent to which a business is discouraged from either coming or remaining in a locale is based on the location’s regulatory framework and the extent of the regulatory impact. They have to consider: How onerous are the regulations on the business operations? How costly is compliance? What is the likelihood that there are more favorable conditions in other locales that are equally suitable for their business operation? Businesses always make the kind of argument that Comcast has, but they are much more sophisticated in their considerations. They won’t just make their decision based on this one regulation. It’s much more complex than that.

Does asking for someone’s wage history perpetuate discrimination? Is there evidence to support that it does?
I can’t point you to any empirical evidence, but there is logical proof that it does. If we know that a portion of the gender wage gap is attributable to discrimination, and that discrimination is based on the fact that women have historically received lower pay as the result of a number of discriminatory circumstances in the workplace, then that information can be used in prospective wage negotiations.

If an employer has the option of paying an employee more or less, they’re not going to pay an employee more than they have to. This is a business right and an economic consideration. It may not be that the employer desires to discriminate. It may not be that the employer itself has engaged in discrimination.

But because we know discrimination has factored into the wage history of that prospective employee, and the prospective employer uses that information, as they are likely to do because it allows them to pay an employee less than they otherwise would, that perpetuates discrimination.

And this is where the law can step in. The City of Philadelphia can tell employers that they’re not allowed to consider that factor in setting up wages. Otherwise, it’s logical that an employer would: You have been paid less in the past, so I can pay you less now.

Some experts, like Wharton professor Peter Cappelli, have argued that the absence of wage history actually hurts applicants because it leads employers to make assumptions. What’s your response to that?
Yes, employers may also make decisions based on how much they think the applicant has made in the past. Some of that will happen, but it doesn’t mean that it will entirely undercut the beneficial effect of reducing the impact of past discrimination in prospective wages.

A Comcast senior executive has argued that without wage history, they won’t know how to pay prospective employees, particularly those moving into positions that have never existed before. Is this a challenge for many businesses?
Employers always like to calibrate their decisions against the market, and there are many ways to do this. I’m not aware of any employer that doesn’t have salary ranges for positions. If you are in a senior executive band or in a middle management band, they have descriptors for the kind of experience and skill associated with particular job categories. Employers should benchmark themselves both internally against those job groups and externally against comparable positions in the marketplace.

They do have to strike a delicate balance: How do we pay just enough to get the best people without overpaying?

Can you put what Philadelphia is trying to do here in a broader labor context?
This legislation is simply part of a wave of a worker’s rights labor movement that has been sweeping the country now for that last several years, if not the last decade, to radically shift state and local laws around the workplace. Ban the box legislation is another example of a populous wave against arbitrary obstacles to employment. The living wage movement has also gotten a number of states and localities to increase their living wage even though we can’t get an increase in the federal minimum wage. It’s a broader labor movement that’s been going on for a long time. If employers are going to start moving their business operations every time a state or locality enacts a labor law, they’re going to be doing a lot of relocation.

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