Women Cannot Be Paid Less Based on Prior Salary

By Milana Dostanitch

The Equal Pay Act prohibits paying men higher compensation than women for performing the same work, with the exceptions of: (1) seniority, (2) merit, (3) the quantity or quality of the employee’s work, or (4) “any other factor other than sex.” See 29 U.S.C. § 206(d)(1). Previous case law, including an April 2017 panel ruling, had held that past salary was a permissible “factor other than sex” that employers could use to justify pay gaps between men and women under the federal Equal Pay Act.

However, the 9th Circuit’s April 9, 2018 en banc decision in Aileen Rizo v. Jim Yovino, No. 16-15372 (9th Cir. 2018) overturned several decades of case law and specifically the seminal case of Kouba v. Allstate Insurance Co. 691 F.2d 873 (9th Cir. 1982), holding that “[p]rior salary alone or in combination with other factors cannot justify a wage differential.” The opinion was authored by Judge Stephen Reinhardt before his death, who stated that “[t]o hold otherwise — to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum — would be contrary to the text and history of the Equal Pay Act.”

The 9th Circuit explained that in passing the Equal Pay Act, Congress meant for the Act to correct the “serious and endemic problem” of women being paid less than men for the same work. As such, the 9th Circuit held it would be “inconceivable” that Congress meant for the “factor other than sex” exception to include salary history, because Congress could not have meant to let businesses justify new gaps and disparity in wages based on old and existing gaps in wages.

The court concluded that “any other factor other than sex” is limited to legitimate, job-related factors such as a prospective employee’s educational background, experience, ability, or prior job performance.  The court’s ruling is significant and will hopefully assist women in achieving equal pay.

Photo Credit: Thomas Leuthard

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