The Equal Pay Act bars employers from paying men and women differently for the same work. The Act places the burden on plaintiffs to show they're paid less because of their sex, and also allows employers four affirmative defenses: that the disputed pay policy is based on seniority, that it's based on merit, that it measures earnings by quantity or quality of production or that it's based on factors other than sex.
A 9th Circuit decision last month revealed a divide among circuit courts over whether the Equal Pay Act allows an employer to pay a female employee less based upon salary history alone. The Supreme Court may be asked to resolve this split in the circuits or, more likely, Congress will be asked to address this issue which the plaintiff’s bar contends only perpetuates pay discrimination.
In this matter, the plaintiff alleged in her complaint that a male colleague made substantially more money than her due to a policy of paying new workers no more than 5 percent more than they made previously. In its April 27th decision, the 9th Circuit overturned a district court holding that the Equal Pay Act didn't outright bar a superintendent of a school in California from paying a female math consultant less than her male counterparts based solely on pay history, as long as business reasons for the policy could be established.
The 9th Circuit's decision in Rizo v.Yovino, turned on the last affirmative defense noted above -- the factors other than sex defense. The district court denied summary judgment to the school district finding that a policy that pays the sexes differently for similar work solely based upon prior wages does not fall under the “other factor” defense. The 9th Circuit vacated this ruling. In doing so, the panel said the district court wrongly disregarded its 1982 ruling in Kouba v. Allstate, which held that prior salary alone is a "factor other than sex" when an employer's salary policy "effectuate[s] some business policy" and uses a worker's pay history "reasonably in light of the employer's stated purpose as well as other practices." The district court cited decisions by the 10th and 11th circuits that found the Equal Pay Act bars employers from using salary history as the sole justification for a pay disparity, and attorneys say the 5th Circuit has ruled similarly.
The 9th Circuit decision appears to also conflict with the 7th Circuit's 2005 ruling in Wernsing v. Department of Human Services, which ruled that salary history could be a "factor other than sex," but criticized the Kouba court for finding judges can weigh an employer's business justification for a salary history test.
The immediate impact of this decision is limited. The vast majority of 9th Circuit employers operate in California, which last year adopted a state law barring employers from using salary history as the only justification for a pay disparity. We’ll have to wait to see if en banc review is accepted by the 9th Circuit or whether Supreme Court review is requested. In the meantime, keep an eye out for federal and/or state legislation barring employers from using salary history as the only justification for a pay disparity.