Appeals Court Says Salary History Can't Block Equal Pay Act Claims

Author:Mr Richard Meneghello, Miranda Watkins and Megan C. Winter
Profession:Fisher Phillips LLP
 
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In a landmark decision that will accelerate the growing pay equity movement, especially for employers on the west coast, the 9th Circuit Court of Appeals today became the latest federal court of appeals to rule that employers cannot justify a wage differential between men and women by relying on prior salary. By tightening the language contained in the Equal Pay Act, the 9th Circuit has just made it more difficult for employers to justify pay differentials and defend pay equity claims. This is a wake-up call for all employers to ensure their compensation structures do not unfairly limit the amount of money women earn at their organizations.

Employee Finds She Is Paid Less Than Others Solely Because Of Her Salary History

The facts of the case are fairly straightforward. Aileen Rizo was hired as a math consultant by the Fresno County Office of Education in 2009. The county's Standard Operating Procedure for determining salary dictated that new employees would be given a 5% raise from whatever their salaries had been at their previous job and then placed into a structured salary schedule. Rizo was earning a little over $50,000 at her previous post in Arizona before joining Fresno County, so she was slotted into the appropriate step as dictated solely by that previous salary. The county did not take prior experience or any other factor into account when setting Rizo's salary.

A few years later, Rizo learned that male colleagues subsequently hired in similar roles had been placed into higher salary steps—assumedly because their salaries at previous employers had been higher than her previous salary. An internal complaint did not resolve the matter to her satisfaction, so she filed an Equal Pay Act (EPA) claim against the county in 2014. Although she received a favorable ruling from a lower federal court which would have allowed her case to proceed to trial, a three-judge panel of the 9th Circuit Court of Appeals initially reversed that decision in 2017 and ruled in the county's favor. Because this matter was deemed sufficiently significant, however, the 9th Circuit agreed to hear the matter en banc—meaning a full complement of 11 judges would rule on the matter. Their decision would set controlling law for all employers in the 9th Circuit's jurisdiction, which includes those in California, Washington, Nevada, Arizona, Oregon, Alaska, Hawaii, Idaho, and Montana.

The Crucial Question

The county admitted that male colleagues earned more than Rizo...

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