Friday, April 20, 2018

9th Circuit Rules Using Salary History to Set Pay May Violate Equal Pay Act

A court for the first time this week has held that using pay history as a basis to set salaries may violate the Equal Pay Act.

In the case of Rizo v. Yovino, the plaintiff, Aileen Rizo was a math specialist with the Fresno, California school district. She was the only woman in that job but worked alongside a number of male math specialists. One day at lunch with her colleagues, Rizo discovered that she was the lowest paid math specialist among the group despite comparable experience and education. She quickly complained about the pay disparity but was not given a raise.

Frustrated with the pay disparity, she filed suit under the Equal Pay Act claiming that she was being paid less based on her gender. The School District responded that it based salaries on pay history, not gender, placing all new hires in the pay grade that would give them a 5% increase in pay from their last job.

A panel of the 9th Circuit Court of Appeals found in favor of the School District last year because the pay differential was based on a factor other than sex, so even though the effect of the pay policy was that the only woman in the job was paid less, it was not a policy directed at women. The plaintiff sought reconsideration of the decision.

This week, a majority of the 11 judges comprising the entire 9th Circuit Court overruled that decision, finding that salary history cannot be used, whether alone or with other factors, to justify gender-based pay gaps. Only legitimate, job-related factors, such as a prospective employee's experience, training, education or prior performance, can justify gender-based pay disparities under the Equal Pay Act. Prior salary is a "second-rate surrogate" for those job-related factors and likely masks continuing pay inequities, the court said.

Plenty of data reveals that historical pay differentials based on gender continue today. Basing current pay on pay history may perpetuate the “gender gap.” According to the Department of Labor, women still only earn 82% of what men earn doing the same job.

The issue continues to be addressed legislatively as well. Eight states and many local governmental entities have outlawed inquiries of job applicants about their pay history. Look for this trend to continue.

With continued focus on gender issues in the workplace and the gender pay gap, employers are encouraged to review their pay policies along with other workplace policies and practices to ensure gender equality and protection against discrimination.