Ninth Circuit Confirms That Salary History May Not Be Used to Justify Unequal Pay (US)
It seems fairly simple: Do the same work, get the same pay. Despite the simplicity of the concept, courts continue to grapple with what this means in the context of the federal Equal Pay Act, which, since 1963, has prohibited employers from paying men and women different wages for the same or substantially similar work, with four limited exceptions: where the different rate of pay as between male and female employees is based on (1) seniority; (2) merit; (3) the quantity or quality of the employee’s work; or (4) “any other factor other than sex.”
In 2009, an experienced female math teacher, Aileen Rizo, relocated from Maricopa County, Arizona to Fresno County, California to take a position as a math consultant to the County Office of Education. When she moved, Fresno County did not consider a salary range for the position or compare her to similarly situated math consultants to determine her salary, but instead took her final salary in Arizona – which has a very different cost of living than California – and added 5%. As a result of this formula, Ms. Rizo was paid substantially less than her comparable male peers, and, in fact, even less than entry-level male employees.
Ms. Rizo sued under the Equal Pay Act, but the County argued that it did not rely on prohibited sex-based differentiators when deciding her pay rate. Instead, the County claimed, it relied on a “factor other than sex,” specifically her salary history. The district court denied the employer’s motion for summary judgment, but a three-judge panel of the Ninth Circuit Court of Appeals reversed. Ms. Rizo then sought review by a more fulsome panel of the Ninth Circuit Court of Appeals and, after reconsidering past Ninth Circuit jurisprudence, the Ninth Circuit Court of Appeals sitting en banc affirmed the district court’s decision and sided with Ms. Rizo. However, Judge Stephen Reinhardt, who authored the majority opinion, died before the opinion was published. The County appealed on procedural grounds and the Supreme Court remanded the decision to the Ninth Circuit for reconsideration without the late Judge Reinhardt’s participation.
On February 27, 2020, the Ninth Circuit again ruled en banc that the “factor other than sex” affirmative defense is limited and must comprise only job-related factors. Because prior salary history takes into account pay for a position other than the one held by the allegedly aggrieved employee, it is not a job-related factor sufficient to defeat a prima facie Equal Pay Act claim. This is true whether or not past salary history is due to sex discrimination. The Ninth Circuit rejected the County’s argument that Ms. Rizo should have to establish that her prior salary was depressed as a result of sex discrimination. Instead, the Court focused on the fact that what Ms. Rizo earned in a different job for a different employer is irrelevant to what she should be paid for the work the County hired her to do.
The opinion reaffirms the Ninth Circuit’s interpretation of the Equal Pay Act, which is shared by the Second, Fourth, Sixth, Tenth, and Eleventh Circuits, that only job-related factors may be considered in connection with the factor-other-than-sex defense. Only the Seventh Circuit, in Fallon v. Illinois, 882 F.2d 1206 (7th Cir. 1989), has unequivocally found that the factor-other-than-sex defense “embraces an almost limitless number” of other criteria, even ones unrelated to the requirements of the particular position in question, as long as they don’t involve a worker’s sex. Without going as far, the Eighth Circuit has also expressed a willingness to read the defense broadly, stating in Taylor v. White, 321 F.3d 710 (8th Cir. 2003), that courts must analyze proffered reasons on a case-by-case basis to preserve “the business freedoms Congress intended to protect.” This Circuit split may lead the Supreme Court to finally resolve the meaning of the defense and put an end to what many say is a loophole that perpetuates gender inequities.
Pending a final outcome, employers are advised to take preventative steps to minimize the risk of pay disparity. First, ensure whether state law permits obtaining salary history at all. Eighteen states and 21 municipalities have, to various degrees, banned employers from requesting salary history information from job applicants. Second, predetermine salaries or salary ranges for open positions, clarifying what sex-neutral factors may lead a selected candidate to be on the high or low end of the salary range. Finally, unlike Title VII, Equal Pay Act claims do not require proof of discriminatory intent, meaning that employers must remain vigilant of pay disparity and actively address and remedy it. Employers are therefore encouraged to audit salaries of existing employees to identify widening salary gaps between male and female employees and ensure that any differences are explained by factors other than sex.