Notice & Comment

Greater Philadelphia Chamber of Commerce v. City of Philadelphia: Are Employer Information Requests Commercial Speech?

Several states and municipalities, including the City of Philadelphia, have adopted laws prohibiting employers from asking prospective employees for their wage and salary history.[1]  Such statutes and ordinances are designed to attack persistent wage disparities between White and non-White as well as male and female employees.  The Greater Philadelphia Chamber of Commerce challenged the Philadelphia’s Wage Equity Ordinance.  The Third Circuit recently reversed a District Court ruling and upheld the Ordinance.  Greater Philadelphia Chamber of Commerce v. City of Philadelphia, 2020 WL 579733 (3d Cir. Feb. 6, 2020), rev’g, 319 F. Supp. 3d 773 (E.D. Pa. 2018).  This post summarizes and analyzes that decision

I.  The Wage Equity Ordinance and the District Court’s Decision

Philadelphia’s Wage Equity Ordinance provides:

(a) It is an unlawful employment practice for an employer . . .

(i) To inquire about a prospective employee’s wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history, or retaliate against a prospective employee for failing to comply with any wage history inquiry.

(ii) To rely on the wage history of a prospective employee from any current or former employer of the individual in determining the wages for such individual at any stage in the employment process, . . . unless such applicant knowingly and willingly disclosed his or her wage history to the employer, employment agency, employee or agent thereof.

. . .

(c) For purposes of this Section 9-1131, “to inquire” shall mean to ask a job applicant in writing or otherwise. . . .

Chamber of Commerce, 319 F. Supp. 3d at 780.[2]  Paragraph (a)(ii), the Reliance Provision, prohibits employers from considering wage history in setting prospective employee’s salaries, making such information irrelevant with respect to salary setting.  Paragraph (a)(i), the Inquiry Provision, supplements that command by prohibiting employers from inquiring about salary history, making it more difficult to violate the Reliance Provision.  The penalties for employers who violate the Ordinance are significant.  Violators are subject to both civil and criminal penalties, including compensatory damages and punitive damages per violation up to $2,000.  Repeat violators subject themselves to an additional $2,000 penalty and 90 days’ incarceration.  Greater Philadelphia Chamber of Commerce, supra, at *3. 

The District Court found the Reliance Provision constitutionally permissible because it regulated conduct rather than speech.  Chamber of Commerce, 319 F. Supp. 3d at 804.  But it viewed the Inquiry Provision as a commercial speech regulation and used the test the U.S. Supreme Court announced in Central Hudson Gas & Electric. v. Public Service Commission (“Central Hudson”), 447 U.S. 557 (1980), to scrutinize the provision.  Under Central Hudson, as later modified by Board of Trustees, SUNY v. Fox, 492 U.S. 469, 479–80 (1989), in assessing limitations upon commercial speech courts must determine whether: (1) the speech concerns lawful activity and is not misleading; (2) the asserted governmental interest is substantial; (3) the regulation directly advances the governmental interest asserted; and (4) there is a “reasonable fit between the legislature’s ends and the means chosen to accomplish those ends.”  See, Chamber of Commerce, 319 F. Supp. 3d at 785; Greater Philadelphia Chamber of Commerce, supra, at *14.  The District Court concluded that the regulation foundered on the third requirement.  It found insufficient evidence that the Inquiry Provision directly advanced the government goal of narrowing gender and racial salary disparities.  Chamber of Commerce, 319 F. Supp. 3d at 800.  In doing so, it questioned the empirical basis for the link between precluding wage history inquiries and gender, race, and ethnic wage disparities.

While the conclusion that a discriminatory wage gap could be affected by prohibiting wage history inquiries was characterized by respected professionals as a logical, common sense outcome, more is needed. . . . the testimony in support of this theory is riddled with conclusory statements, amounting to “various tidbits” and “educated guesses.” Importantly, aside from Dr. Madden’s affidavit, the information relied upon by the City does not address the possibility that disparate wages could also be based on factors having nothing to do with discrimination, such as qualifications, experience, or any number of other factors . . .

Greater Philadelphia Chamber of Commerce, 319 F. Supp. 3d at 797-98. 

II.  The Third Circuit’s Decision

The Third Circuit panel, like the District Court, categorized the Inquiry Provision as a regulation upon commercial speech.  It viewed “proposal[s] of possible employment,”[3]  including both (1) communications advertising labor availability and terms of employment and (2) agreements “under which services will be exchanged for compensation,” as commercial speech, without need for further analysis. Greater Philadelphia Chamber of Commerce, supra, at *13.  Nevertheless the Court noted that its precedents had recognized three questions relevant to categorizing speech as commercial: (1) is the speech an advertisement; (2) does the speech refer to a specific product or service; and (3) does the speaker have an economic motivation for the speech?  Id.  With respect to the Inquiry Provision, the answers to each of the three questions pointed in the direction of recognizing wage history queries posed to potential employees as “commercial speech.”  Id.  As I suggest below, the Court went awry in categorizing the banned wage history inquiries as “commercial speech” rather than commercial “conduct.”

Applying the Central Hudson test, the Third Circuit panel found that the prohibited speech was unrelated to illegal activity, because wage history could properly be used in some circumstances.  Id. at *17.  The City argued that the permissibility of reliance on wage history in some circumstances did not render the illegal conduct principle inapplicable.  Id.  The Court rejected the argument fearing that it would enable a city to “perform an easy end-run around First Amendment scrutiny by passing a speech restriction in conjunction with a law that made one use of the regulated speech illegal.” Id. 

The Court spent much time on the questions of whether the Inquiry Provision directly advanced the government’s wage equity goals and was sufficiently narrowly tailored. It was here that the Court engaged in a detailed analysis of the quantum of proof prior commercial speech cases have required.  It discussed four Supreme Court cases upon which the District Court heavily relied, as well as several other cases the panel found more compelling.[4]  The panel ultimately concluded that the evidence adduced of a pay gap, and its perpetuation by gaps in salaries in prior employment was quite strong, as was the evidence that the Inquiry Provision would directly advance the goals of eradicating such wage disparities.  The following key passage provides a sense of the courts more extended analysis.

Terry Fromson explained how this wage gap is compounded through institutional discrimination and explained how other states have addressed this issue. Marianne Bellesorte researched the wage gap for women and men of color, and explained how the inequities began right out of college and continued to affect women, in particular, until retirement. Finally, Jovida Hill and Rue Landau provided empirical evidence that substantiated the distilled conclusions of Fromson and Bellesorte. . . . Moreover, Dr. Madden’s affidavit amplified this testimony by viewing it through the empirical lens of thousands of studies she summarized. There is therefore ample evidence to establish the fit between the Inquiry Provision and the societal evil it was intended to address.

Id. at *22, see also, id. at *18 (explaining that the Madden affidavit would have been sufficient by itself to support the ordinance).  The Court noted that the evidence in support of laws limiting commercial speech need not be as strong in other cases —  “we think it important to emphasize that neither scores of empirical studies nor proof to scientific certainty is necessary to carry the City’s burden.” Id. at *22.  More particularly, it cautioned that where a legislature presents an “innovative solution,” it “may not have data that could demonstrate the efficacy of its proposal because the solution would, by definition, not have been implemented previously.” Id. at *22.  The Court also noted the difficulty of proving or eradicating racial and gender discrimination.  Id. at *25-*26.

Turning to the fit between endemic wage disparities and the Inquiry Provision, the Court also found the provision narrowly tailored.  Id. at *26-*29.  It rejected the idea that the Inquiry Provision include a racial classification, namely that is should preclude inquiry into the wage histories of only non-White or female applicants (since White male applicants could not be disadvantaged by having to provide such information).  Id. at *27. It also rejected the argument that the City had to attempt more rigorous enforcement of its anti-discrimination laws before it sought to ban wage history inquiries.  Id. at *29.  The Court emphasized that narrow tailoring did not require the tightest fit between the commercial speech regulation and the government objective.  Moreover, any alleged underinclusiveness (such as allowing employers to consider voluntarily disclosed wage history information in setting salaries) was not a fatal because the City need not address an entire problem at once. Id. at *28.

III. Observations

Intermediate scrutiny under Central Hudson can be quite intrusive and demanding.  See, e.g., Florida Bar v. Went For It, Inc., 515 U.S. 618 (1995).  And several scholars and jurists have warned that the commercial speech doctrine augurs a return to the era of Lochner-type judicial scrutiny of economic regulation.[5]  Greater Philadelphia provides a graphic illustration of that potential.  Yet, the Third Circuit could have avoided the intensive scrutiny it gave to the Inquiry Provision, by properly defining the scope of commercial speech.

A. Commercial Speech and Commercial Conduct

Efforts to secure information involuntarily, particularly in the context of potential employment, should not receive the protections accorded commercial speech.  In the typical commercial speech case, the commercial speaker seeks to offer goods or services for sale or convince potential customers of the appeal of such goods or services.  More broadly, the commercial entity may simply provide information about itself and its laudable efforts to burnish its image or its brand (without proposing a particular transaction).  Government regulation of such speech is largely intended to prevent commercial entities (including prospective employers) from communicating certain information to the public in general or to potential customers (or potential job applicants).  Any agreements to purchase services resulting from such communications will generally be a matter of mutual consent.  Indeed, the “speaker” and the “listener” have congruent interests.

Philadelphia’s Wage Equity Ordinance is quite different.  The employers subject to regulation are attempting to obtain personal information from another, namely a job applicant.  The information indeed might be considered not only personal, but private.  And there is an element of coercion that distinguishes such wage history requests from the speech typically involved in commercial speech cases.  In particular, if the job applicant prefers to withhold the information, the employer may refuse to hire the applicant.  This exerts pressure on applicants to provide the information despite their own preferences, and even though applicants may realize that the disclosure works to their disadvantage.[6]  Indeed, employers’ requests for information from job applicants are extensively regulated in similar ways to those employed by Philadelphia’s Wage Equity ordinance. 

The Employee Polygraph Testing Act prohibits polygraph testing of current or potential employees.[7] The Genetic Information Nondiscrimination Act, and its accompanying regulations, prohibit employers from asking employees for genetic information, except in limited circumstances. [8]   The Equal Employment Opportunity Commission (“the EEOC”) has interpreted Title VII to prohibit employers from asking potential applicants about their criminal histories, particularly their arrest records, on the grounds that such inquiries may have a disparate impact on certain racial or ethnic groups.[9] Many states and localities have joined the “ban the box” movement, regulating when and under what circumstances employers can ask applicants about their criminal histories.[10]  Many states and localities have adopted laws prohibiting employers from requiring that job applicants provide access to their social media accounts.[11]   And, like the Philadelphia Wage Equity Ordinance, such provisions limiting the queries employers can make rarely preclude employers from considering or relying upon the type of information targeted by the regulation in all circumstances.

Wollschlaeger v. Governor of Florida, 848 F.3d 1293 (11th Cir. 2017), is the only “commercial speech” case discussed in either the trial court or appellate court opinions in Greater Philadelphia Chamber of Commerce that comes close to the type of speech/conduct regulated by Philadelphia’s Inquiry Provision.  In Wollschlaeger, doctors challenged a Florida law that precluded doctors from asking patients about firearms ownership and possession of firearms within the home.  But even there, the element of coercion inherent in job applicant/employer context was absent.[12] 

The commercial speech doctrine accords less protection to commercial speech than to non-commercial speech.  But some employer “speech” should be viewed as the equivalent of conduct, and subjected to lower “rational basis” scrutiny, like economic conduct that does not take the form of speech (such as agreements between economic actors, or coercive threats by economic actors). 

Indeed, Kent Greenawalt captures this distinction with his concept of “situating altering” utterances, a type of speech which he differentiates from assertions of fact and value.  KENT GREENAWALT, SPEECH, CRIME, & THE USES OF LANGUAGE 43-44, 57-68 (1989).[13]  Advertisements of products are assertions of fact or value.  They make statements of fact and communicate certain values that the listener may find informative and persuasive, or not.  Requests for information, on pain of not receiving a job offer are “situation altering,” they change the circumstances under which the recipient of the request must act.  The job applicant is no longer free to decide for himself or herself whether to reveal certain personal information, the applicant must do so knowing that their employment will turn on their willingness to do so.  Under Greenawalt’s taxonomy, requests by potential employers would appear to be categorized as “orders.”  Id. at 65-66.[14] 

B.  Applicability of the Rationales Underlying Special Protections for Speech

The rationales underlying our protection of “free speech” offer little reason for protecting employer’s requests for information from their prospective employees, should be subject to much more than “rational basis” scrutiny.  The typical justifications for according special constitutional status to speech are its roles in: (1) promoting the discovery of truth and knowledge, (2) furthering self-governance in a democracy, (3) facilitating individual autonomy, and (4) promoting a tolerant society.[15] Personal information about specific job applicants or employees hardly plays a role in promoting the sort of truth and knowledge valuable to society as a whole.  And business entities are not engaged in the project of knowledge-creation when asking such questions (as opposed to a scholar or journalist exploring wage disparities).[16]  Moreover, it is not clear that coercing individuals to provide information is a form of speech justified by the interest in the promotion of truth and knowledge.  Indeed, while our polity values truth and knowledge, it also values privacy with regard to personal information.

Employers’ efforts to obtain such information hardly plays a role in furthering democratic governance.  Advertisement and speech designed to burnish a company’s image may indeed inform the public of matters relevant to public issues.  But acquiring information simply for use in setting wages for one’s own employees, and not for analysis or further dissemination, hardly furthers democratic governance.

 With regard to self-fulfillment, wage history inquiries are counterproductive — they undermine the autonomy of the recipient of the request.  They allow potential employers to coerce potential employees to provide information about themselves that the job applicants would rather not reveal.  A job applicant’s wage history is generally somewhat innocuous (in terms of revealing private information about the person),[17]  but social media postings, genetic information, and criminal history are much less so. 

Commercial speech has not been justified as facilitating the development or maintenance of a tolerant society, so perhaps this purpose of protecting speech is largely irrelevant with respect to making inquiries of job applicants.  Nevertheless, employer wage history inquiries hardly further the goal of maintaining a tolerant society.

C.  Acquisition vs. Dissemination of Information

Philadelphia employers are not really seeking to disseminate information about job applicants’ wage history, but to use it in their decision-making.  However, even if the right to disseminate information were at issue, limitations on acquisition of such information would enjoy few Free Speech Clause protections.  The right to disseminate information is dependent on the ability to acquire information.  Thus, efforts to seek information may be protected by the First Amendment in some circumstances.[18]  But maintaining a distinction between dissemination of information and its acquisition is critical to maintenance of a vibrant Free Speech doctrine.  Our robust protection of the right to disseminate information is tenable only because individuals have the right to limit access to themselves and their information.  Thus, individuals have robust rights to communicate information they receive from others voluntarily, but government may, consistent with the Free Speech Clause, empower individuals to withhold information about themselves from others.  When employers or potential employers seek information, there is a question regarding whether the information is given voluntarily — the individual provides the information (making it voluntary in a sense), but under some level of coercion (making it involuntary in another).  Government should be able to define the rules regarding information that can be requested in such an ambiguous context, particularly when the issue involves private use of the information rather than the type of dissemination of information at the core of the Free Speech Clause.

IV.  Conclusion

Categorizing what appears to be protected speech properly — as conduct, not speech — would have made Greater Philadelphia Chamber of Commerce a much easier case, and would probably have prevented the District Court from going astray.  Both the Court of Appeals and the District Court would merely have had to satisfy themselves that the Inquiry Provision had a “rational basis.”

Free speech doctrine hardly seems to need more fragmentation or increased complexity.  Nevertheless, the conflicting interests to the parties in job applicant-employer communications, the one seeking information on which to propose an economic deal and the other perhaps seeking to protect their privacy and avoid discrimination, makes Philadelphia Chamber of Commerce a very different case from typical commercial speech case involving consensual communications that both the speaker and the hearer welcome. 

* * * * *

[1] Practical Law Labor & Employment, State and Local Salary History Bans (accessible on westlaw); Practical Law Labor & Employment, State and Local Salary History Laws Chart: Overview (accessible on westlaw).

[2] The web page for the Ordinance with a link to its full text is here.

[3]The Court cited Pittsburgh Press Co. v. Pittsburgh Comm’n on Human Relations, 413 U.S. 376, 385 (1973), and  Bigelow v. Virginia, 421 U.S. 809, 821 (1975).  

[4] The District Court had relied upon Edenfield v. Fane, 507 U.S. 761 (1993)(rule prohibiting CPAs from in-person solicitation of clients.), Rubin v. Coors Brewing Co., 514 U.S. 476, (1995)(provision prohibiting beer labels from displaying alcohol content in order to forestall a “strength war” among brewers), Pitt News v. Pappert, 379 F.3d 96, 107–08 (3d Cir. 2004)(banning alcohol ads from university publications), and Wollschlaeger v. Governor of Florida, 848 F.3d 1293 (11th Cir. 2017)(banning doctors asking patients about firearm ownership and presence of firearms in their homes).

The Third Circuit discussed those cases, as well as Burson v. Freeman, 504 U.S. 191, (1992)(established 100-foot bubble zone that prohibited political speech outside of polling places), Central Hudson, 447 U.S. 557 (1980) (ban on electric utility advertising to promote the electricity use), and Tennessee Secondary School Athletic Association v. Brentwood Academy, 551 U.S. 291 (2007)(prohibited high school coaches from using “undue influence” when recruiting middle school students). The Third Circuit panel engaged in more detailed analysis of two additional cases, Florida Bar v. Went For It, Inc., 515 U.S. 618 (1995), and King v. Governor, 767 F.3d 216 (3d Cir. 2014), abrogated on other grounds by, Nat’l Inst. of Family & Life Advocates v. Becerra, — U.S. —, 138 S. Ct. 2361, 2371-72 (2018).  Florida Bar was a challenge to an ethics rule prohibiting personal injury lawyers from sending targeted direct-mail solicitations to victims and their relatives for 30 days following an accident or disaster.  King was a challenge to a New Jersey law prohibiting sexual orientation change efforts therapy to persons under the age of 18.

[5] Sorrell v. IMS Health, 564 U.S. 552, 591-92 (2011)(Breyer, J., dissenting); Robert Post & Amanda Shanor, Adam Smith’s First Amendment, 128 HARV. L. REV. F. 165 (2015); Amanda Shanor, The New Lochner, 2016 WIS. L. REV. 133; Richard Samp, Sorrell v. IMS Health: Protecting Free Speech or ResurrectingLochner?, 2010 CATO SUP. CT. REV. 129, 133-34 (2011); see generally, William French, This Isn’t Lochner, It’s The First Amendment: Reorienting The Right To Contract And Commercial Speech 114 Nw. U. L. Rev. 469, 484-90 & n.142 (2019).

[6] The same problem can characterize some purchases of goods or services. Market conditions may lead typical customers to believe, justifiably, that they have little choice but to provide requested information to a provider of goods or services.  For example, customers might reasonably believe that the good or service is a necessity and is unavailable from another provider.  For instance, a public utility or medical insurer might possess a virtual monopoly in certain areas, leaving customers little option but to provide any information they request.  The existence of a common practice in an entire industry may place consumers in a similar position.

[7] Employee Polygraph Testing Act, Pub. L. 100–347, § 3, June 27, 1988, 102 Stat. 646. (codified at 29 U.S.C. §2002).

[8] Genetic Information Nondiscrimination Act, Pub. L. 110-233, tit II §202 (2008); 29 C.F.R. 1635.4, 1635.8.

[9] Equal Employment Opportunity Commission, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, EEOC Enforcement Guidance, No. 915.002 (April 25, 2012) (In some cases, inquiries regarding an applicant’s former arrests and reliance on such information, even if done in a neutral manner, may constitute prohibited racial or national origin discrimination.)  

[10] Garen Dodge, “Ban the Box” and Background Checks – Recent Trends and Movements (July 12, 2017).

[11] Sachi Barreiro, State Laws on Social Media Password Requests By Employers (last accessed Feb. 15, 2020); National Conference of State Legislatures, Access to Social Media Usernames and Passwords (March 15, 2019).

[12] The Third Circuit panel found the decision unpersuasive, describing its reasoning as “tenuous,” even while accepting the categorization of the case as a commercial speech case.  Philadelphia Chamber of Commerce, supra, at *13.  It also asserted that the record amassed by the City of Philadelphia was far more extensive than the “few anecdotes” that served as the basis for the Florida law.  Id.

[13] The notewriter who critiques the claims that the commercial speech doctrine augurs a new Lochnerism relies on a similar distinction, asserting that the commercial speech doctrine should be limited only to speech that is “persuasive.” This Isn’t Lochner, supra, 114 NW. U. L. REV. at 491-92, 495-96, 499, 503 (citing Thomas Emerson).

[14] Greenawalt’s concept of orders is more nuanced than our typical understanding of the word, namely express commands which the recipient has a legal obligation to follow.  For instance, depending on the applicable social conventions, it might include calling upon a students in class to answer in class, or “requests” coming from superiors.  Id. at 66.

[15] See SPEECH, CRIME, & THE USES OF LANGUAGE, supra, at 9-34.  HARVEY L. ZUCKMAN, ET AL., MODERN COMMUNICATIONS LAW §1.2 (1999); JOHN E. NOWAK & RONALD D. ROTUNDA, CONSTITUTIONAL LAW §16.6 (8TH ed. 2010).  In Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council,  425 U.S. 748 (1976), the Court also noted that the voluntary exchange of information about products available in the marketplace is the foundation of a capitalist system. Id. at 465.  But voluntary exchange of information about legally available products, services, and employment opportunities should be more immune from regulation than the exchange of information resulting from coercion

Moreover, federal, state, and local governments should possess the power to modify the operation of the “free market” so as to preclude certain matters from being considered in making economic choices.  For instance, anti-discrimination laws exclude certain personal characteristics from consideration in making economic decisions regard whom to hire and whom to serve. 

Of course, the need for such government authority might be accounted for by the first prong of Central Hudson, properly interpreted.  Philadelphia simply sought to remove past wage history as a factor in determining an employee’s salary (in most circumstances), and the Inquiry Provision basically precluded employers from forcing employees to provide information that Philadelphia had the right to make irrelevant.

[16] Cf., Dun & Bradstreet v. Greenmoss Builders, 472 U.S. 749, 762 (1985)(plurality opinion)(false report that construction contractor filed for bankruptcy not “a matter of public concern” because the information was intended only for five subscribers); accord, Trans Union Corp. v. FTC, 245 F.3d 809, 818 (D.C. Cir. 2001).

[17] Indeed, the Inquiry Provision seeks not to protect privacy, but to remove a barrier to the goal of attaining economic equality for racial and ethnic minorities and women.

[18] This point is more often made in the context of journalism than employer-employee relations.  See, Branzburg v. Hayes, 408 U.S. 665, 681 (1972) (“[n]or is it suggested that news gathering does not qualify for First Amendment protection; without some protection for seeking out the news, freedom of the press could be eviscerated.”); id. at 727-28 (Stewart, J., dissenting)(“[a] corollary of the right to publish must be the right to gather news[;] . . . without freedom to acquire information the right to publish would be impermissibly compromised”).

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