‘What Did You Make at Your Last Job?’- Ninth Circuit Holds Prior Salary is No Justification for Current Pay Gap

It is well known that women often earn less than men for doing the same work. Per a Pew Research Center analysis, women in the United States earned about 82% of what men earned in 2017. The United States Court of Appeals for the Ninth Circuit recently addressed this “pay gap” in considering whether an employer may justify a difference in salary paid to men and women based on an employee’s salary history.

Last month, in Rizo v. Yovino, the Ninth Circuit held that salary history may not be used by employers to justify a wage gap between male and female employees. Reliance on prior wages, the majority explained, perpetuates the cycle of sex discrimination in violation of the Equal Pay Act.

The Equal Pay Act (“EPA”) was enacted by Congress in 1963 to address pervasive sex discrimination in employment and to promote the principal of equal pay for equal work. Under the statute, a Plaintiff may make a showing that men and women in the workplace are being paid differently for substantially equal work. In response, the employer may argue that it fits into one of four statutory exceptions, including that the differential is “based on any factor other than sex.” 29 U.S.C.S. § 206(d)(1)(iv). In this case, the employer argued that history of prior salary was a “factor other than sex,” meaning the wage disparity is permissible under the EPA.

The en banc Ninth Circuit disagreed, concluding that “factor[s] other than sex” are limited to legitimate, job-related considerations such as a prospective employee’s experience, educational background, or prior job performance. The majority further concluded that prior salary history may not be considered even in combination with bona fide job-related considerations. Due to a history of pervasive sex discrimination in employment, prior salary is not a legitimate measure of job performance and may instead operate to perpetuate the exact disparities that the EPA is designed to prevent.

In a concurring opinion, Judge M. Margaret McKeown suggested that prior salary may be considered alongside valid job-related factors, so long as it is not the sole consideration relied upon by the employer in justifying a pay gap. This opinion is consistent with those of the Tenth and Eleventh Circuits, which have held that prior pay alone is insufficient to justify a disparity under the EPA.

Apart from the action in the courts, many cities and states have recently passed legislation aimed at reducing the pay gap by forbidding salary inquiries by employers. In January of 2017, the City of Philadelphia enacted a wage equity ordinance which forbids employers from both asking about (“the inquiry provision”) or relying upon (“the reliance provision”) the prior salaries of prospective hires. A federal judge partially blocked Philadelphia’s ordinance on April 30, 2018, ruling that the “inquiry provision” infringed on the First Amendment rights of the employer. The portion of the ordinance forbidding reliance on the employee’s prior salary, however, is still in effect. Similar laws have been passed in California, Massachusetts, Pittsburgh, New York City, and Chicago.

It is unclear what effect, if any, the Ninth Circuit’s ruling will have in addressing the pervasive pay gap, but the recent surge of judicial and legislative interest certainly feels like a step in the right direction.

If you have any questions regarding discrimination in employment, please contact a Willig, Williams & Davidson Attorney at 215-656-3600.