As we previously reported, on June 26, 2019, Toledo City Council passed the Pay Equity Act; Mayor Wade Kapszukiewicz signed the law on July 5, 2019. The Pay Equity Act is a local ordinance which generally prohibits employers who employ more than 15 employees and are located within the City of Toledo from inquiring about, relying on, or requiring job applicants to disclose salary history as a condition of employment. The ordinance also precludes employers from screening job applicants based on their compensation history and from requiring that an applicant’s salary history satisfy certain minimum or maximum criteria.
The ordinance endeavors to reduce pay inequity for all. Specifically, the City of Toledo’s goal in passing the Pay Equity Act was to ensure that employee wages are based on job responsibilities and level of experience, rather than an applicant’s prior salary.
The ordinance creates legal repercussions for employers within the City of Toledo who ask or require applicants to disclose their prior salary history. Although there is no violation if an applicant voluntarily discloses his or her previous salary history, an employer still may not rely on an applicant’s salary history when determining whether to employ the applicant or determine the applicant’s compensation. The Pay Equity Act also includes an anti-retaliation provision, making it unlawful for an employer within the city to refuse to hire an applicant who declines to disclose his/her prior salary history. The ordinance provides an exception for employers which engage in discussions with applicants about their expectations regarding salary, benefits, and other compensation. There are also exceptions for, among other things, current employee’s internal transfers or promotions and employees who are rehired by the employer within five years of the date of the applicant’s separation, if the employer maintained the former employee’s pay history.
The ordinance will take effect on July 4, 2020 and encompasses a two-year statute of limitations. Toledo employers should reexamine job applications and hiring documentation, and remove any inquiries of previous salary history.
Toledo’s ordinance is consistent with local, state and federal trends. Earlier this year, Cincinnati passed similar legislation which bans employers within the city of Cincinnati from requesting or relying on prior salary history. Other states, including California, Oregon, and Washington have introduced bans on prior salary history. Last year in Rizo v. Yovino, the Ninth Circuit Court of Appeals held an employer cannot justify a wage differential between men and women by relying on prior salary. Earlier this year, on February 25, 2019, the United States Supreme Court vacated and remanded the Ninth Circuit’s decision on procedural grounds. The Ninth Circuit has not yet reissued its decision.