Salary history no good as an EPA defense

The 9th Circuit – en banc – has swept away prior rulings and held that an employer cannot use an applicant's salary history (whether considered alone or with other factors) as a defense in an Equal Pay Act case. A "factor other than sex" must be "job-related." Therefore, an applicant's pre-employment salary history cannot be used as a reason for paying a woman less than a man for doing the same work. Rizo v. Yovino (9th Cir 04/09/2018) (en banc) [PDF], overruling Kouba v. Allstate, 691 F3d 873 (9th Cir 1982).

The Equal Pay Act requires employers to pay men and women the same amounts for work that "requires equal skill, effort, and responsibility, and which are performed under similar working conditions." One exception is for "a differential based on any other factor other than sex."

The en banc court concluded that "any other factor other than sex" is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.

"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."

The majority (six judges) clearly view the use of prior salary as a perpetuation of prior discrimination, which the EPA was designed to eliminate.

"Congress simply could not have intended to allow employers to rely on these discriminatory wages as a justification for continuing to perpetuate wage differentials."

This all sounds like a clear, bright line, yet the majority is leaving some wiggle room for individualized salary negotiation.

"Today we express a general rule and do not attempt to resolve its applications under all circumstances. We do not decide, for example, whether or under what circumstances, past salary may play a role in the course of an individualized salary negotiation."

Two concurring judges wrote that they agree with most of the majority opinion, particularly its observation that past salary can reflect historical sex discrimination. However, they said the majority went too far in holding that any consideration of prior pay is impermissible under the Equal Pay Act, even when it is assessed with other job-related factors.

Two other concurring judges wrote that in holding that prior salary can never be considered, the majority failed to follow Supreme Court precedent, unnecessarily ignored the realities of business, and, in doing so, might hinder rather than promote equal pay for equal work.

One judge concurred in the judgment, saying that the better view is that past pay can constitute a "factor other than sex," but only if an employee’s past pay is not itself a reflection of sex discrimination.

A number of other Circuits pretty much agree, but the 9th Circuit looks like the toughest of the bunch.