Ninth Circuit Rules Prior Salary Does Not Justify Differences in Pay Between Men and Women Under the Equal Pay Act
Nicholas Fortuna, April 24, 2018
The United States Court of Appeals for the Ninth Circuit ruled unanimously on April 9, 2018 that employers cannot justify different pay for male and female employees by using salary history alone, overturning three decades of circuit case law. U.S. Circuit Judge Stephen Reinhardt wrote the decision in Rizio v. Yovino for an en banc court in one of his final opinions before his death in March.
Aileen Rizo, a math consultant for the Fresno County Office of Education, argued that a male new hire with less experience made more than she did in violation of the Equal Pay Act. The disparity in pay was based on her salary history.
The policy of Fresno County Superintendent of Schools at the time was to add five percent to previous salaries of all new hires. Fresno County asserted that the policy was gender neutral and was applied to more than 3000 employees over 17 years and had no disparate impact on female employees.
The Equal Pay Act states that men and women should receive equal pay for equal work regardless of sex. Under the Act, an employer can excuse gaps in pay between men and women performing the same work if those gaps are based on a “factor other than sex.” Because Fresno schools’ policy perpetuates existing pay differences between men and women, the court said it violates the law. The court further stated that “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 those very disparities – disparities that Congress declared are not only related to sex but caused by sex.” To hold otherwise, the court said, “would be to perpetuate rather than eliminate the pervasive discrimination at which the act was aimed.”
Confusingly, the court backtracked a bit on a blanket rule that salary history cannot be used by stating in the opinion that it did not decide “whether or under what circumstances past salary may play a role in the course of individualized negotiation.” The question as to what happens in negotiations and how salary history may be used was left to other courts to sort out. The answer may be as simple as that salary history can be used to establish the salary of new hires if it does not result in a wage gap between men and women.
The Fresno County plans to appeal to the Supreme Court. The situation is ripe for Supreme Court review because the circuit courts are split on whether employers are permitted to rely on salary history in justifying wage differences under the Equal Pay Act. The Ninth, Tenth and Eleventh Circuits have found that employers cannot use salary history; the Seventh and Eighth circuits have found the opposite. A Supreme Court decision in this case will resolve the split among the courts.
In the interim, employers should use salary history to negotiate the wage of new hires in a manner that does not result in a wage gap between men and women.