Salary

Employers take note: At least within the area covered by the Ninth Circuit Court of Appeals (including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), prior salary history can no longer justify a pay difference between male and female employees.  In a move that reversed the court’s own previous ruling, an 11-judge panel held that a woman’s salary history can never be used as a basis for paying her less.

The federal Equal Pay Act (EPA) prohibits employers from paying men and women differently, except where the difference is justified by merit, seniority, quantity or quality of work, or “any other factor other than sex.” When Aileen Rizo, a public school teacher in Fresno County, California, discovered that she was being paid less than her male colleagues with the same job, she filed a lawsuit against the county for unequal pay under the EPA.  The county argued that the pay disparity was justified by Rizo’s relatively low prior salary, and that this was a permissible “factor other than sex” under the EPA.

The court disagreed, concluding that “any other factor other than sex” only includes “legitimate, job-related factors” like a potential employee’s experience, educational background, ability, or prior job performance and does not include salary history. This decision is a direct reversal of a prior decision in the Ninth Circuit, and is more strict than the approach taken in some areas of the country covered by other federal circuit courts, such as the Tenth and Eleventh Circuits, where prior salary can be considered along with other non-discriminatory factors, though it still cannot justify pay disparity on its own.  The Ninth Circuit’s decision also conflicts with the Seventh and Eighth Circuit’s holdings that wage disparities based on salary history do not violate the EPA.

This decision comports with recent laws enacted by several states and cities specifically banning employers from asking job candidates about their salary histories. For example, in 2016, Massachusetts became the first state to put such a law on the books.  Similar laws are also now in effect in the states of California, Delaware, New Jersey, New York, and Oregon,  as well as in the cities of Boston, New Orleans, New York City, Philadelphia, Pittsburgh, and San Francisco.

Employers with employees in any of these jurisdictions should immediately make sure their hiring practices comply with the law. Given the split between the positions of the different federal appeals courts that have addressed the issue thus far, it may not be long before the Supreme Court weighs in.  Until that happens, however, the best practice is to be very cautious before asking prospective employees about their salary history or using it to determine their pay.