According to the United States Court of Appeals for the Ninth Circuit, prior salary history, alone or in combination with other factors, cannot justify a wage differential between male and female employees under the federal Equal Pay Act.
Details: On April 9, 2018, the U.S. Court of Appeals for the Ninth Circuit held in Rizo v. Yovino that prior salary alone or in combination with other factors cannot justify a wage differential between male and female employees under the Equal Pay Act. No. 16-15372 (Apr. 9, 2018). The Ninth Circuit has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. This Rizo decision overturns a 2017 Ninth Circuit decision holding that prior salary was a permissible “factor other than sex” under the Equal Pay Act. The Rizo decision is now the federal law in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.
Background: The Fresno County Office of Education paid the plaintiff, Aileen Rizo, less than comparable male employees for the same work. The County set starting pay based on a pay scale that expressly took into account prior salary.
Rizo sued for violation of the Equal Pay Act, among other claims. The County defended the Equal Pay Act claim on the basis of the fourth “catch-all” affirmative defense in the Equal Pay Act, which provides, in pertinent part, that wage differentials are permissible if “based on any factor other than sex.”
The Ninth Circuit held that the “factor other than sex” affirmative defense is limited to “job-related factors” and that prior salary is not “a legitimate measure of work experience, ability, performance, or any other job-related quality.” The Court explained:
“We conclude, unhesitatingly, that ‘any other factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing ‘endemic’ sex-based wage disparities, would create an exception for basing new hires’ salaries on these very disparities — disparities that Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.”
Although the case arose in an initial wage setting, the opinion suggests that the logic applies with equal force to promotions and job transfers. However, the Court did not address whether past salary may legitimately play a role in the course of individualized salary negotiations. It stated, “We prefer to reserve all questions relating to individualized negotiations for decision in subsequent cases.”
Call to Action: This decision follows a string of new state and local regulations banning the use of prior salary or salary history in setting pay. Employers in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington should review and if necessary, revise their pay practices and policies to be consistent with both the Rizo decision and applicable state pay equity laws. Employers may also want to consider working with legal counsel to complete an equal pay analysis.
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