Equal Pay Act Litigation – Salary History May Not Justify Wage Differential

Photo by Jungwoo Hong on Unsplash

In an Equal Pay Act opinion that is significant for employers in California, Washington, Nevada, Arizona, Oregon, Idaho, Montana, Alaska, and Hawaii, the 9th Circuit Court of Appeals, held:

“prior salary alone or in combination with other factors cannot justify a wage differential. To hold otherwise – to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum – would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands.”

This decision came just one day before Equal Pay Day. April 10, 2018, this year’s Equal Pay Day, is the symbolic date to which an average woman working full time had to work to earn what her male counter-part earned in 2017 – an extra 99 days.

Case Facts

In Rizo v. Yovino, a female employee, Aileen Rizo, sued her employer, Fresno County Office of Education, when she learned that male colleagues who were hired into similar positions were placed in higher salary steps. This pay disparity was not because the employer had a policy of paying women less but because salaries for new employees were calculated based on a formula of 5% above what the employees made at their previous position.

The Court’s Decision

The 9th Circuit rejected the employer’s argument that a female employee’s lower wages when compared to other male employees performing substantially similar work did not violate the Equal Pay Act because it was based on factors other than sex, namely, her salary history.

In its decision, the Court clarified that the defense that a pay differential between sexes was the result of a factor other than sex, should only be limited to factors that are relevant to the employees’ jobs, such as “a prospective employee’s experience, educational background, ability, or prior job performance.” Since prior salary is not job-related, it is not a legitimate justification for why women are paid less than men within the organization.

In short, an employer may not justify paying women less because women have historically been paid less.

Coming Trends in Equal Pay Act Litigation

It is likely that more states will follow California’s example of making it illegal to ask job candidates for their salary histories. However, even California’s law does not prohibit candidates from voluntarily disclosing this information. The catch is that employers may not take salary history into consideration. Equal Pay Act violations will likely be a growing trend as more employees feel comfortable sharing and comparing their salaries, thereby possibly revealing any pay discrepancies employers may not even be aware exist but are unable to legally justify.

Schedule a call if you have questions about the Equal Pay Act.

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In: Employment Law

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