New Wage Law Makes Free Agency in Philadelphia Awkward

Philadelphia rang in 2017 by becoming the largest American city to allow its government to dictate what is and isn’t healthy for its citizens to drink. The maligned “soda tax” went into effect January 1st tacking on a 1.5 cents per ounce tax on any beverage with sugar in it. Philadelphians are now penalized for consuming soda, sports drinks, juices, teas, and even almond milk. What a time to be alive.

Buried under the soda tax news was another major law passed by City Council that impacts all employers in Philadelphia — including sports teams. On December 8, 2016, City Council unanimously passed Philadelphia Bill No. 160840, which prohibits any employer in the city — both public and private — from inquiring into applicants’ wage histories. Mayor Jim Kenny is expected to sign the bill any day now, which will then take effect 120 days after signing.

Philadelphia is now the first U.S. city to ban employers from asking job applicants about salary histories. Prohibiting employers from asking about salary history is supposed to narrow the wage gap for women and minorities. Obviously, time will tell if this law solves that problem.

But how exactly are Philadelphia’s professional sports teams supposed to approach free agency under this new law while attempting to sign athletes, attract coaches, and recruit front office personnel?

Landing premiere free agents is, at its core, about offering more money whether dealing with a star player, coach, or GM. In certain instances, a free agent will choose a new team based on a desire to compete for a title contender or to gain more playing time, but in the end it almost always comes down to money.

Now, however, Philly’s new wage ordinance makes it unlawful “for an employer, employment agency, or employee or agent thereof” 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.” The ordinance also makes it unlawful for an employer to retaliate against a prospective employee for failing to comply with any wage history inquiry.

Teams often already know everyone else’s salary in a given league, but there are aspects of contracts such as bonuses, escalator clauses, performance awards, etc. that are not necessarily public knowledge. A scenario where an agent would play coy and not disclose those details to gauge just how much a Philly team wants the client is not out of the realm of possibility.

Or what about the Phillies trying to woo the next Theo Epstein? They can’t ask him what he was previously making and technically cannot even use that information from making an offer. The law actually prohibits an employer from relying upon past wage history unless the applicant “knowingly and willingly” discloses it. This means that the employer has to set its own price and hope that it is good enough. They can’t even use Google to look up someone’s wage history.

Of course, potential employees are free to disclose their prior wage history. I imagine almost every non-athlete or top front office person in line for a sports job would do so. Yet most sports jobs typically pay next to nothing. It could play to the applicant’s advantage to elect not to disclose wage history. But then how would that applicant know if not doing so negatively impacted their chance of getting hired?

On the flip side, if an employer is truly interested in a candidate for say a front office analytics job, how will they know how much to offer to both not insult the candidate and to attract them?

Hopefully the new law really does close the wage gap. Frankly, it probably does not come into play when trying to land the next mega star. Yet some of Philadelphia’s largest employers are sports teams and their HR personnel must be aware of this new ordinance and tread lightly in salary negotiations.

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