Ninth Circuit Rules Salary History Cannot Justify Lower Salary

The Ninth Circuit Court of Appeals ruled April 9, 2018, that an employer cannot justify a wage differential between male and female employees by relying on prior salary alone or in combination with other factors.

In the case of Rizo v. Yovino No. 16-15372, employee Aileen Rizo sued her employer, the Fresno County Office of Education, for a violation of the Equal Pay Act. Rizo complained her salary was lower than that of her male counterpart. The county did not dispute it paid Rizo less than comparable male employees for the same work. However, it argued that the wage differential, which considered her prior lower salary, was lawful under the Equal Pay Act.

The Equal Pay Act of 1963 requires employers to pay equal wages for equal work on jobs that require equal skill, effort, and responsibility, performed under similar working conditions. The four exceptions to the law are when the pay is based on a:

• Seniority system
• Merit system
• System that measures earnings by quantity or quality of production
• Differential based on any other factor than sex

The employer argued Rizo’s prior salary fell into the fourth catchall exception, “any other factor other than sex,” because her starting salary was based on her prior salary.

However, the court determined it did not:

“It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing ’endemic’ sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities—disparities that and stated, ’Prior salary, whether considered alone or with other factors, is not job-related and thus does not fall within an exception to the Act that allows employers to pay disparate wages.’ Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.”

The Rizo decision marks a major shift in how the Ninth Circuit has interpreted the Equal Pay Act. In Rizo, the Court expressly overruled it’s finding in Kouba v. Allstate Ins. Co., 691 F2d 873 (9th Cir 1982). (Kouba held that an employer could consider its employees’ prior salary to determine their wages without violating the Equal Pay Act.).  Also, the Ninth Circuit decision is more restrictive than other Federal Circuit Courts that have addressed the issue.  The Tenth Circuit (Angove v. Williams-Sonoma Inc., 70 F. App’x 500, 508 (10th Cir. 2003)) and Eleventh Circuit, (Irby v. Bittick, 44 F.3d 949, 954 (11th Cir. 1995)), prohibit employers from using salary history as the sole reason for paying a woman less.

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