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Ninth Circuit Rules Women and Men Cannot Be Paid Differently Based On Salary History

Published by on May 11, 2018

The Ninth Circuit’s ruling widens the circuit split on use of salary history to set pay.

On April 9, 2018, an en banc panel of Ninth Circuit Court of Appeals held that an employee’s salary history cannot form the basis of a wage differential between men and women, reversing years of precedent. In Rizo v. Yovino, the Fresno County Office of Education was paying the Plaintiff, Aileen Rizo, a female math consultant, less than comparable male employees doing the same work.

The Equal Pay Act provides that employees shall not discriminate on the basis of sex by paying wages to one sex at a rate less than the rate of another sex for performance requiring equal skill, effort, responsibility and performed under similar working conditions unless the pay differential is due to: (1) a seniority system; (2) a merit system; (3) earnings measured by quantity or quality of production; or (4) a differential based on any other factor other than sex. 29 U.S.C. § 206(d)(1). Permissible factors that may justify a pay differential include experience, educational background, ability, or prior job performance.

Fresno County argued that salary pay history falls into the fourth factor because it is a “factor other than sex.” The majority of the court rejected the County’s argument, reasoning that, if prior salary history is imbedded with sexism, then it is not a “factor other than sex.” The majority opinion explained that relying on previous salary perpetuates past discrimination, which is what the Equal Pay Act was designed to remedy. The opinion clarified that “factor other than sex” must be a job-related factor such as experience, education background, ability, or job performance.

The majority opinion left a glaring ambiguity, however, as to whether salary history may be used in salary negotiations. According to the court, the ruling “should in no way be taken as a barring or posing any obstacle to whatever resolution future panels may reach regarding questions relating to such negotiations.” It is not clear how use of salary history in negotiations will play out in the lower courts in the future but companies that attempt to carve out a “negotiation exception” to the court’s ruling will likely have a long road of litigation ahead.

This decision widens the spectrum of various circuit decisions related to this issue. The Seventh and Eighth Circuits have held that pay history is a “factor other than sex” and can be used alone to justify gender pay disparity. Meanwhile, the Sixth, Tenth, and Eleventh Circuits have held salary history may be considered, but must be in conjunction with other factors such as training, education, or experience.

Welter Insight

Employers in the Ninth Circuit, which include the states of California, Arizona, Alaska, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington, should be aware that they are not permitted to use pay history to justify pay disparities between employees of the opposite sex. As for use of pay history in salary negotiation, this open-ended issue will be a future litigation battleground. In the meantime, employers in the Ninth Circuit would be wise to remove salary history questions from their job applications and interview questionnaires. Additionally, state laws (such as in California) may require the removal of salary history questions from job applications. Employers in other jurisdictions that request salary histories should be careful about how heavily they rely on salary history information in making salary determinations—-making sure to note other factors such as training, education, and ability. Employers should keep an eye on this issue as the Supreme Court will likely attempt to resolve this circuit split down the road.

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