Employers can’t use Salary History as Basis for Paying Women Less than Men, Holds Federal Court of Appeals

On April 9, 2018, the Ninth Circuit Court of Appeals held in Rizo v. Yovino that paying women less than men based on “prior salary alone or in combination with other factors” is a violation of the Equal Pay Act.

The plaintiff, Aileen Rizo worked as math consultant for the Fresno County Office of Education. She discovered in 2012 that she was being paid much less than her male counterparts, despite having more seniority and experience, and brought this case against her employer for pay discrimination later that year.

In 2017, a three-judge panel of the Ninth Circuit held that Rizo’s employer could legally base her pay on her previous salary, relying on the court’s 1982 holding in Kouba v. Allstate Ins. Co., 691 F.2d 873 (9th Cir. 1982), that salary history was a permissible “factor other than sex” upon which employers could base a woman’s salary under the Equal Pay Act. Rizo appealed the 2017 decision, the court heard the case again, this time en banc, and overturned the ruling in Kouba.

Before his death last month, the late Judge Stephen Reinhardt wrote in the majority opinion, “The Equal Pay Act stands for a principle as simple as it is just: men and women should receive equal pay for equal work regardless of sex. The question before us is also simple: can an employer justify a wage differential between male and female employees by relying on prior salary? Based on the text, history, and purpose of the Equal Pay Act, the answer is clear: No.”

"Although the (Equal Pay) Act has prohibited sex-based wage discrimination for more than 50 years, the financial exploitation of working women embodied by the gender pay gap continues to be an embarrassing reality of our economy," wrote Reinhardt in the decision. According to Pew Research Center, the gender pay gap has decreased somewhat since 1980 but remained about the same since the early 2000s, with women today earning on average about 82% of what men earn.

The defendant’s attorneys said in a statement that they "respectfully disagree with the Ninth Circuit En Banc's analysis and will petition for review by the United States Supreme Court."

We will continue to monitor developments in this case.