The Ninth Circuit overturned its own precedent today and ruled that employers cannot justify a pay disparity between men and women by relying on employees’ past salaries. Rizo v. Yovino, No. 16-15372 (9th Cir. Apr. 9, 2018).
The Equal Pay Act requires that men and women receive equal pay for equal work. Employers can defend a pay disparity through one of four statutory exceptions, one of which is “any factor other than sex.” Historically, many employers have defended Equal Pay Act claims by proving that certain pay disparities were the product of market conditions, including employees’ pay at previous employers. In the past, the Ninth Circuit Court of Appeals has recognized and accepted this defense. However, the Ninth Circuit has now concluded that any such factors must be job-related, and prior salary, alone or in combination with other factors, is not job-related.
Employers in states and territories within the Ninth Circuit (Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, and Washington) should immediately review their hiring and pay practices in light of this decision.
Legislation has been introduced in the Colorado General Assembly each of the last two years which would have prohibited employers from asking applicants about their previous pay, on the theory that consideration of past pay carries forward any past pay discrimination. The Ninth Circuit’s opinion adopts that reasoning. Although the Ninth Circuit does not cover Colorado, this decision and any others like it will give this type of legislation traction and make it more difficult for employers to justify any consideration of pay history. That being said, we can expect that, somewhere down the road, this issue will be resolved by the Supreme Court.