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A federal judge has ruled that Philadelphia’s ordinance banning employers from inquiring about a job-seeker’s salary history violates the First Amendment, an impediment to the city’s stated goal of leveling the playing field for women and minorities seeking equal wages.

However, the city didn’t walk away completely empty-handed, as the judge also held that companies cannot base hiring decisions on salary history.

U.S. District Judge Mitchell S. Goldberg of the Eastern District of Pennsylvania ruled in favor of The Chamber of Commerce for Greater Philadelphia, which argued the law was bad for businesses.

The law is made up of two components: an inquiry provision that deals with employers asking candidates about wage history, and a reliance provision that makes it illegal for companies to rely on salary history in making a hiring decision.

Companies violating the rules can face a $2,000 fine per instance and potential jail time for repeat offenders.

“I conclude that the city’s inquiry provision violates the First Amendment. Although the ordinance represents a significant positive attempt to address the wage gap, the First Amendment compels me to enjoin implementation of the inquiry provision,” Goldberg wrote in his opinion. “The reliance provision, however, does not offend the First Amendment and remains intact. I commend the city for pursuing a novel method of attempting to reduce the wage gap, but am bound by the First Amendment’s exacting requirements for speech restrictions.”

In a statement released by the Chamber, a spokesperson said that the organization agreed with the city’s position on wage equity and remains willing to work with the city to advance that goal. The lawsuit was always about the unconstitutional prohibition of salary knowledge, the Chamber argued.

“The Philadelphia business community fully supports closing the gender wage gap and pledges to continue to seek ways to ensure that every worker is paid fairly regardless of gender,” the statement said. “As an advocate of the regional business community, the Chamber recognizes that addressing the evolving demographic changes in our region is fundamental to the growth and sustainability of our members. Creating an inclusive environment that engages individuals reflective of the full spectrum of our region is key to the success of Greater Philadelphia. This ordinance, however, is not the answer to closing the gender wage gap.”

Mike Dunn, a spokesman for Mayor Jim Kenney, said the city is looking at its next step.

“While the city is evaluating its options following the ruling, we are encouraged that the judge agreed that the city does have the legal authority to prohibit employers from relying on salary history when determining the wage of a new hire,” Dunn said. “In other words, even if employers ask job applicants about salary history, employers can’t use the answers to determine how much to pay someone. In doing so, the ruling upholds a key aspect of the legislation.”