Nicole Rice

Court rules past salary history no longer defensible factor

By Nicole Rice, Policy Director, Government Relations

Capitol Update, April 13, 2018

The Ninth Circuit Court of Appeals has reversed its own precedent and ruled that prior salary history is no longer a legitimate factor to explain pay disparities between men and women performing similar work.

Granting en banc review of last year's Rizo v Yovino that upheld the decades-old law that prior salary history is a "factor other than sex" that an employer may rely on in setting pay rates, the court newly ruled that an employer cannot rely on salary history, either alone or in combination with other factors, in determining a new employee's wages.

In their decision, the Court stated,

Prior salary . . . is not a legitimate measure of work experience, ability, performance, or any other job-related quality. It may bear a rough relationship to legitimate factors other than sex, such as training, education, ability, or experience, but the relationship is attenuated. More important, it may well operate to perpetuate the wage disparities prohibited under the Act. Rather than use a second-rate surrogate that likely masks continuing inequities, the employer must instead point directly to the underlying factors for which prior salary is a rough proxy, at best, if it is to prove its wage differential is justified. . . .

The Court further reasoned:

We conclude, unhesitatingly, 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. 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 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 new decision resulted in the defendant–employer being remanded to District Court to stand trial for violating the federal Equal Pay Law. This action has raised concern and confusion among employers as to whether they can and will be held liable for previous decisions that relied on the long-standing legal doctrine that has now been overturned.

California's law banning employers from seeking salary history information or relying on salary history information with respect to applicants for employment went into effect this year.

Click here to review the decision.


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