In 1963, Congress enacted the Equal Pay Act (29 U.S.C. § 206(d)(1)), requiring equal pay for equal work regardless of sex. Under the Act, an employer may justify paying male and female employees different wages for substantially equal work only by showing that the disparity in pay is explained by a seniority or merit system, a system basing earnings on quantity or quality of production or “on any other factor other than sex.”
Fifty-five years later, the Ninth Circuit, sitting en banc, held that a worker’s prior wage rate with a former employer is not a “factor other than sex” and cannot be used to justify wage differentials between men and women. Rizo v. Yovino (9th Cir. Apr. 9, 2018) 2018 WL 1702982. As the court explained, to hold otherwise would be to perpetuate the historical pattern of wage discrimination against women that the Equal Pay Act was intended to eliminate.
For Equal Pay Act purposes, the court held, “any 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.”
Though it has grabbed headlines nationwide, Rizo is a subtle, not a dramatic, departure from prior Equal Pay Act decisions. Before, an employer might justify a disparity in initial pay based in part on prior wages so long as it also relied on other, business-related factors in setting initial pay. In Rizo, the defendant school district defended its pay disparity that way, claiming it gave every new employee 5% over his or her pay from the prior employer as a way of attracting new employees while also avoiding any waste of public funds or favoritism among employees. A prior Ninth Circuit decision appeared to support the school district’s defense, as have decisions from other Circuit Courts of Appeal. Rizo rejects that approach, holding that prior wages can never justify current pay disparity, with or without other job-related factors.
The Rizo decision will also have relatively little impact in California, since Labor Code section 432.3, effective January 1, 2018, forbids an employer from asking job applicants for his or her salary history information and from relying on that information, even if voluntarily supplied, as a factor in determining whether to offer employment or what salary to offer a job applicant.
For more information on any of these new laws, handbook compliance, or any employment compliance issues, contact Diane P. Cragg at 415-677-5530, dpc@severson.com; or Rhonda L. Nelson at 415-677-5502, rln@severson.com.
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