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Ninth Circuit Rules for Second Time That Employers May Not Use “Salary History” to Justify Paying Women Less Than Men

PayInequality

Since the 1960s, the federal Equal Pay Act (EPA) has prohibited employers from paying women less than men to perform the same job. Put another way, an employer cannot engage in pay discrimination on the basis of sex. But an employer may be able to justify a pay disparity on a “factor other than sex,” such as seniority or merit.

Unfortunately, eliminating sex-based pay discrimination is not as easy as passing law forbidding the practice. Many employers have found ways to get around the law. One common method is to base a new employee’s starting pay on their salary history, i.e., their pay in prior jobs. This can effectively perpetuate sex discrimination, as women often earn less in their first jobs. This salary history then follows them to subsequent jobs where they end up continuing to earn less than their male counterparts.

For this reason, California adopted statewide legislation in 2017 to ban the use of salary history as a factor in determining the pay for new hires. Indeed, California now prohibits employers from asking an applicant about their salary history during the interview process, with limited exceptions. But questions remained as to whether or not the federal EPA also considered salary history as a legitimate factor in setting the pay of workers.

Fresno Must Face EPA Lawsuit After Paying More Experienced Female Consultant Less Than Male Colleagues

In 2018, the U.S. Ninth Circuit Court of Appeals issued its decision in Rizo v. Yovino, which held that an employer could not use salary history as an “affirmative defense” to a lawsuit brought under the EPA. The case involved a female plaintiff who worked as a math consultant for the Fresno County Office of Education. One day, she learned that all of her male colleagues were paid more than she was–despite the fact she actually had more education and experience.

The County said it based the plaintiff’s pay on a salary schedule that took her salary history into account. Specifically, the policy added 5 percent to her prior wages as her starting salary. The plaintiff sued, arguing this violated the EPA.

The Ninth Circuit, affirming a trial judge’s ruling, denied the County’s motion for summary judgment. The appeals court rejected the County’s position that the use of salary history was a legitimate “factor other than sex” permitted by the EPA. However, the U.S. Supreme Court vacated the Ninth Circuit’s ruling in February 2019 on a legal technicality unrelated to the merits of the case.

After reconsideration, the Ninth Circuit again held on February 27, 2020, that salary history was not a valid defense to an EPA lawsuit. The Court explained that employers could only rely on “job-related factors” in setting different pay for employees–and prior pay was not such a factor.

Ninth Circuit’s Decision May Have Limited Effect in California

California state now forbids employers from asking about a job applicant’s salary history. So the practical impact of the Ninth Circuit’s ruling with respect to the EPA may be limited. But if you have additional questions or concerns about the EPA and your rights in the workplace or believe you have been subjected to unequal pay practices, you should speak with a qualified California employment law attorney.

https://www.employmentrightscalifornia.com/have-you-lost-your-job-due-to-covid-19-here-is-what-you-need-to-know-about-applying-for-state-benefits/

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* Cathleen Scott is licensed to practice in Florida only.

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