SALARY HISTORY SHOULD BE HER STORY: UPHOLDING REGULATIONS OF SALARY HISTORY THROUGH A COMMERCIAL SPEECH ANALYSIS.

• Author: Lester-Abdalla, Elizabeth
• Position: NOTES

TABLE OF CONTENTS INTRODUCTION 702 I. DEFINING COMMERCIAL SPEECH 707 A. Understanding Commercial Speech 707 B. Classifying Salary History as Commercial Speech 709 II. REGULATING COMMERCIAL SPEECH 712 A. Virginia State Board and Protection for Commercial Speech 713 B. The Central Hudson Test and Level of Scrutiny 713 1. What Makes a Regulation Permissible 714 2. Intermediate Scrutiny for Regulations 715 3. Deregulation Through the First Amendment 716 4. Counteracting the Deregulation Movement and Heightened Scrutiny 718 III. THE GOVERNMENT AND THE GAP 721 A. Substantial Government Interest in Wage Equality 722 B. Shortcomings of the Wage Equality Legal Framework 724 C. Ineffectiveness of Salary History as a "Factor Other Than Sex" 725 IV. ADVANCEMENT OF PUBLIC INTEREST THROUGH REGULATION 727 A. Narrowness of Salary History Bans 728 1. Comparison of Salary History Bans 729 2. Reasonable Fit of Regulation to Interest 731 B. Responding to Regulation Criticisms 732 L Common Sense 732 2. Alternative Means of Determining Pay 734 3. Corporate Embrace of Salary History Bans 735 CONCLUSION 736 INTRODUCTION

"How much did you make at your previous place of employment?" It is one of the questions applicants and new employees dread the most. (1) Encountering this question is always a bit awkward because, without any indication of what the employer thinks is an appropriate salary range, you may worry that a prospective employer will perceive your previous salary as either too high or too low. However, this question is not just uncomfortable to answer; the question of salary history also serves as a persistent barrier to gender-based wage equality. (2)

Upon graduation from college, women make an average of $2.99 less per hour than recent male college graduates, despite women attaining a higher rate of bachelor's degrees. (3) When women already start out on a lower rung, or return to the workforce after taking time to raise a family, their salary history will continue to be less than their male colleagues who began with a higher salary. (4)

Take Aileen Rizo, (5) for example. After four years of serving as a math consultant for the Fresno County public schools, Rizo found out that she was making 20 percent less than a male colleague who was only recently hired, was less educated, and had less experience than she did. (6) She then learned from human resources that her current salary was based on her previous salary and could not be changed. (7)

When hiring a new employee, Fresno County takes the new hire's most recent salary and increases it by about 5 percent to place them on a level within the County's salary classification bracket. (8) Although her prior salary was lower than even the lowest level, this newly hired male colleague started at a much higher salary level because of his higher previous salary. (9) More education and experience could not change her predicament if her previous salary did not also reflect that education and experience. (10) As long as her previous salary bound her, Rizo could not do anything to influence her current salary, regardless of what she could offer Fresno County. (11)

This experience is not exclusive to Rizo. Since 1980, Asian women continue to make only $0.87 per dollar earned by white men; white women make $0.79; black women make only $0.63; and Hispanic women make a mere $0.54 on the dollar in the United States when compared to white men. (12) Moreover, if a woman takes time off to start a family or is paid less at a previous job because of negotiation bias (13) or gender bias, then that salary will continue to follow her to new places of employment, regardless of skill or experience level, as long as her employer uses prior salary to determine starting wages. (14)

"Anchoring bias"--the tendency for people to focus on and overemphasize the first piece of information they receive, such as salary history--accentuates this discrepancy. (15) A low salary history can also prevent future job opportunities because employers may assume a candidate is not as qualified as others if her previous salary is lower than anticipated. (16) Katie Donovan, coauthor of the Massachusetts statute restricting salary history questions, says recruiters often use prior salary to eliminate applicants in a large job pool. (17) Employers view salary history as "too high, we can't afford you; too low, you must be bad at your job, or you're not a high enough level." (18) These factors allow the wage gap cycle to continue unbroken far into a woman's career. (19)

For this reason, states and cities across the country have passed or proposed a ban on employers asking a new employee or applicant about previous salary. (20) Massachusetts was the first state in the country to pass a ban on salary history. (21) California, (22) Delaware, (23) Oregon, (24) the City of San Francisco, (25) New York City, (26) and the City of Philadelphia (27) have since taken similar votes and passed legislation which take effect in 2018. New York State (28) has proposed a similar bill. However, the City of Philadelphia now faces legal challenges to its ordinance. (29)

The Philadelphia City Council unanimously passed an ordinance banning salary history without any challenges during the proposal and debate stages; (30) However, the Chamber of Commerce and thirteen local businesses have since filed suit against the city, alleging that the ban infringes their First Amendment rights to free speech; (31) This litigation and free speech claim on behalf of businesses in Philadelphia provides an informative case study to evaluate the merit of employer free speech claims and understand how salary history regulations are not only lawful, but crucial.

The businesses' free speech claim is contingent on courts' views of a corporation's free speech rights. (32) Although courts have upheld corporations' free speech rights in varying degrees over the past century, (33) not all speech is created equal. (34) Some speech, such as commercial speech, is less protected from regulation than other forms of speech based on the substantial government interest involved. (35) In order for courts to uphold a regulation of commercial speech without violating the First Amendment, the regulation must directly advance the government's interest and be narrowly regulated to serve that interest. (36) This standard is a lower bar than the strict scrutiny analysis applied to other speech, such as political speech. (37)

Hence, whether courts in Philadelphia or in cities and states across the country classify salary history questions as commercial speech, warranting a lower standard of constitutional protections, (38) is a question of great importance to working women in the United States. This classification as commercial speech is critical, as it will allow the government to regulate certain areas of strong public interest, such as factors contributing to the gender wage gap, without being struck down by the courts in favor of broader corporate protection. (39)

This Note argues that questions of salary history--whether asked in a job interview or of a new hire--are commercial speech and should be regulated as such without being subject to strict scrutiny. Part I explores definitions of commercial speech and explains why salary history should be classified as such. Part II reviews the Supreme Court's test for commercial speech regulations and then explains why this level of scrutiny remains indispensable to the commercial speech analysis. Part III outlines the substantial government interest in narrowing and eventually eliminating the gender wage gap through means such as salary history bans. This Part also explains why the current framework is insufficient to obtain wage equality and thus why these new laws are necessary. Part IV argues that these salary history laws are sufficiently narrow in directly advancing the government interest and restrict commercial speech in a reasonably confined way. Regardless of the outcome of the litigation in Philadelphia, this Note is important for understanding the regulations that are sweeping the country with regards to employer questions about salary history as commercial speech and why the regulation of these questions is critical for eliminating factors that contribute to the wage gap.

1. DEFINING COMMERCIAL SPEECH

   Commercial speech is an important classification because it is protected and regulated differently than other types of speech, such as political speech. (40) This Part first examines the commercial speech doctrine and what courts have classified as commercial speech. Then it examines how the job process, in particular interviews, relates to other forms of commercial speech to understand how salary history fits into this classification.

   1. Understanding Commercial Speech

      In order to establish employer questions about salary history as commercial speech, it is important to understand what commercial speech is. However, the definition of commercial speech in legal scholarship lacks a degree of certainty and clarity. (41) Despite all of the Supreme Court's discussion on commercial speech, nowhere does the Court lay out a "bright line [rule] for distinguishing a protected employer right from a prohibited employer action." (42) The Supreme Court in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York described commercial speech as "expression related solely to the economic interests of the speaker and its audience." (43) However, in Virginia State Board of Pharmacy V. Virginia Citizens Consumer Council, Inc., the Court seemingly defined commercial speech as "a communication which does no more than propose a commercial transaction." (44) Thus, the Court lacks a comprehensive approach to determine what types of speech are commercial. (45)

      In Virginia State Board, the Supreme Court classified drug prescription information as commercial speech when it determined that this information was a matter of...