Salary History Cannot Be Considered, Says Ninth Circuit
In Rizo v. Yovino, the Ninth Circuit Court of Appeals recently answered the question of whether an employer can justify a wage differential between male and female employees by relying on prior salary under the Equal Pay Act. The Ninth Circuit covers federal courts in Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, and the Northern Mariana Islands.
The Court answered the question in the negative holding prior salary alone or in combination with other factors cannot justify a wage differential. In reaching this conclusion, the Court noted to hold otherwise would “vitiate the very purpose for which the Act stands.”
The Equal Pay Act was enacted in 1963 to ensure equal pay for equal work. Not all differentials in pay violate the Act. There are four exceptions which can justify the difference: (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity of production; and (4) a differential based on any other factor other than sex. The last factor is considered to be a “catch-all” exception.
In Rizo, the Fresno County Office of Education did not dispute that it paid Aileen Rizo, a math consultant, less than male employees for the same work. However, it argued the differential was permitted because the Equal Pay Act allows a wage differential on any other factor other than sex. The County argued Rizo’s prior math teacher salary was low and justified the difference in her salary compared to her male counterparts. The court found this practice perpetuates prior discrimination. The idea is that since a prior employer may have based Rizo’s wages on her gender, relying on her prior salary alone would risk continuing a discriminatory trend. While this case is only binding in the Ninth Circuit, many states and localities have and/or are in the process of enacting Equal Pay laws that address this particular issue. For instance, New York City passed a law in 2017 which prohibits employers from asking about an applicant’s past salary history. Connecticut’s own salary-history ban takes effect on January 1, 2019. Mississippi likewise had a bill in 2018 regarding this issue that died in Committee. Also remember the Rizo decision is based on federal law. Therefore, even if your state or locale has no relevant law, the federal law still applies. Therefore, no matter where you are located, you should address this issue now, before a lawsuit arises.
Brody and Associates regularly advises management on complying with state and federal employment laws including equal pay laws. If we can be of assistance in this area, please contact us at firstname.lastname@example.org or 203.454.0560.r 203.454.0560.