Activists of stronger Equal Pay Act enforcement argue that reliance on salary history to determine current pay perpetuates wage inequity for women because it prevents them from ever catching up to salaries paid to men. That argument is the basis for recent legislation in New York City, Philadelphia and elsewhere prohibiting employers from inquiring or relying on salary history to determine pay. Earlier this week, the Ninth Circuit Court of Appeals addressed this issue as well when it vacated a lower court’s decision reversing a California school superintendent summary judgment victory on an Equal Pay Act (the Act) claim. Plaintiff’s claim was based on the fact that she was denied equal pay as compared to her male counterparts.
Plaintiff was hired by Fresno County schools in 2009 in a management position as a math consultant. In 2012, plaintiff was having a conversation with some colleagues when she learned that a male employee, newly hired for the same job, was being paid more than her. Plaintiff subsequently learned that all other male math consultants were also getting paid at a higher salary than plaintiff. She filed suit claiming this violated the Equal Pay Act. In defending its pay decisions, the County argued that it set starting salaries based on four business factors, one of which is salary history, which is not related to the gender of the employee, thus raising an affirmative defense under the Act.
The lower court, in ruling for the plaintiff held that “when an employer bases a pay structure ‘exclusively on prior wages,’ any resulting pay differential between men and woman is not based on any other factor other than sex.” In making that ruling, the District Court noted that its decision was contrary to existing case law in that Circuit which previously held that “prior salary can be a factor other than sex, provided that the employer shows that prior salary ‘effectuate[s] some business policy’ and the employer uses prior salary ‘reasonably in light of [its] state purpose as well as its other practices.’”
In reversing the lower court, the 9th Circuit reaffirmed its prior decisions that salary history can be a gender neutral factor if part of a reasonable business policy. The federal courts are split in their determination on the appropriateness of use of salary history to determine current pay. It is likely that the Supreme Court will rule on this issue in the next few years. In the meantime, employers should review their salary structures and the factors that they use to set pay to ensure they are not over relying on salary history and to ensure that their pay structure is gender neutral. This issue is getting increased attention around the nation. Stay tuned to the Workplace Report for updates on this and many other employment trends and topics.
