Pay history cannot be used as justification for wage gaps between male and female employees for the same or substantially similar work, according to a ruling from the Ninth Circuit US Court of Appeals.
The Equal Pay Act contains four exceptions where differences in pay for the same or similar work are allowed: a seniority system; a merit system; a system that measures earnings by quantity or quality of production; and a differential based on any other factor other than sex.
Employers have long held to the notion that prior salary fell into the final exception, a differential based on any other factor other than sex. The 11-judge panel in the case of Rizo v. Yovino rejects that long-held notion , asserting that the final exception must be “job-related,” and that “prior salary alone or in combination with other factors cannot justify a wage differential.”
Rizo v. Yovino. Aileen Rizo was a math consultant hired by the Fresno (Calif.) County Office of Education in 2009. Previously, she was employed as a middle and high school math teacher in Arizona.
The county’s pay structure takes a new-hire’s prior salary and adds 5% to determine placement on the county’s multi-step salary schedule. Experience is not a factor. Rizo later learned male colleagues hired after her were placed at higher levels in the county’s pay structure. She sued Jim Yovino in his official capacity as superintendent of the Fresno County Office of Education.
Fresno County “argues that an employee’s prior salary can constitute a ‘factor other than sex’ within the meaning of the catchall exception,” wrote Justice Stephen Reinhardt in his majority opinion. “However, this would allow the county to defend a sex-based salary differential on the basis of the very sex-based salary differentials the Equal Pay Act was designed to cure.”
More than 20 states have introduced some type of pay equity measure in 2018, writes Fiona Coombe, CCWP, SIA’s director of legal and regulatory research, in a recent regulatory update . Some seek to broaden existing equal pay laws, while others aim to create new restrictions, such as a banning employer salary history inquiries.
“Employers in the Ninth Circuit – Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington – should promptly evaluate their pay practices and criteria for compliance with the Rizo decision both for new hires and existing employees,” she said.