California State Law Bars Use of Salary History in Attempts to Justify Paying California Women Less Than Men
“What is your current salary?” “What are your salary expectations?” “What did you make at your last job”
For many job seekers, these have historically been expected question at any job interview. However, with the passage of California’s AB 168 (which led to the creation of California Labor Code section 432.3), and as of January 1st, 2018, California employers are banned from asking questions of prior salary (including questions which may require the employee to disclose prior salary to answer).
Prior to the passage of the law, such practices of asking prior salary have come under fire in recent years, as women have traditionally earned less than men, so relying on salary history has the effect of perpetuating pay discrimination.
California Fair Pay Act: Prior Salary Alone Cannot Be Used to Justify Pay Disparities
In 2016, a major salary discrimination lawsuit was filed against Farmers Insurance by more than 300 female attorneys. As the Los Angeles Times reported about the case, the core problem was not that women were necessarily being hired at a lower salary, though that occurred as well, but it was that male attorneys were significantly more likely to be promoted and offered raises.
This matters, and not just within Farmers Insurance, which paid more than $4 million to settle the gender discrimination claim, but for the long-term careers of these female attorneys. If employers consider salary history, any pay discrimination that occurred at one company is likely to follow a worker around for the rest of their life. It makes it very difficult to address long-term pay discrimination.
Under California state law, employers are generally prohibited from relying on pay history to make a hiring decision or to make salary decisions. Under the amendments to the law that took effect on January of 2018, employers cannot inquire about an employee’s salary history. However, employers can consider this information if the employee/applicant voluntarily discloses the information. In addition, actual and prospective employees have a right to ask the pay scale for the job. Notably, a current company employee who is applying for an internal position within the same firm is not covered by the statute.
California Workers are Also Protected Under Federal Law
At the federal level, but within the federal court district covering California, in the case of Rizo v. Yovino, No. 16-15372 (9th Cir. Apr. 9, 2018) (en banc), the Ninth Circuit concluded that in claims brought under the federal Equal Pay Act of 1963, an employer may not rely on “prior salary alone or in combination with other factors” as an affirmative defense to justify paying men and women differently. The Court said that salary history did not fall within the category of a “factor other than sex” exempt from scrutiny under the federal Act. Instead, an employer could only cite “legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.”
The underlying lawsuit involves a female plaintiff who sued her employer, the Fresno County Office of Education. The plaintiff previously worked for a school district in Arizona, where she earned approximately $52,000 per year. When she was hired by Fresno, district policy set her pay by adding 5 percent to her prior salary in Arizona.
The plaintiff subsequently learned the Fresno policy resulted in her earning less than her similarly situated male colleagues. The County said there was nothing wrong with its policy, and maintained it actually resulted in women earning more at “higher compensation steps” than men. The plaintiff disputed this and filed suit under the federal Equal Pay Act, as well as federal and state sex discrimination laws.
Before the trial court the County moved for summary judgment, reiterating its view that salary history was a “factor other than sex.” The judge denied the County’s motion, noting that a “pay structure based exclusively on prior wages is so inherently fraught with the risk—indeed, here, the virtual certainty— that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand.”
A three-judge panel of the Ninth Circuit initially reversed the trial court’s decision last year, citing prior case law on the subject. But a larger 11-judge panel, known as an “en banc” court, upheld the trial court. Writing for the en banc court, Judge Stephen Reinhardt–who sadly passed away shortly before the opinion was published–noted “the Equal Pay Act was not intended to be a passive measure but a proactive one designed to correct salary structures based on the ‘outmoded belief’ that women should be paid less than men.” Allowing employers to justify pay differentials based on historical salaries would therefore be “inconsistent” with the Act.
Sending a Clear Message to Employers
The Ninth Circuit’s ruling, combined with the recent California legislation, sends a clear message to the state’s employers: You cannot justify sex discrimination in pay by citing prior salary history. If you have any questions about how the law may affect your particular workplace situation or believe you are being paid less than your coworkers due to your gender, contact a qualified California employment law attorney today.