Second Verse, Same as the First: Ninth Circuit Reiterates That Salary History Does Not Justify Pay Differences Under the Equal Pay Act

On February 27, 2020, the United States Court of Appeals for the Ninth Circuit, in Rizo v. Yovino, (again) found that salary history is not a “factor other than sex” that can justify a pay disparity in defense of a claim under the Equal Pay Act of 1963 (EPA). The Ninth Circuit made the same finding in 2018, but the Supreme Court of the United States remanded the case because the judge who authored the original opinion died before it was published.

The EPA requires employers to provide equal pay for “equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.” The EPA provides that employers may identify legitimate reasons for differences in pay, including “a seniority system,” “a merit system,” “a system which measures earnings by quantity or quality of production,” or “any other factor other than sex.”

In Rizo, the Ninth Circuit reiterated that an employee’s “prior rate of pay” does not qualify as a “factor other than sex.” The Court found that “only job-related factors may serve as affirmative defenses to [EPA] claims.” The Court stated, “Allowing employers to escape liability by relying on employees’ prior pay would defeat the purpose of the Act and perpetuate the very discrimination the EPA aims to eliminate.”

The Ninth Circuit also clarified that the McDonnell Douglas burden-shifting analysis, which applies to discrimination cases under Title VII of the Civil Rights Act of 1964, does not apply to cases under the EPA. The EPA does not require a plaintiff to prove that an employer intended to discriminate.

There is a split among circuit courts as to whether salary history can justify differences in pay. It is expected that the Rizo case will again be appealed to the United StTrates Supreme Court. The United States Court of Appeals for the Seventh Circuit recognizes prior salary as a factor other than sex that may justify a difference in pay under the EPA. The Second, Fourth, Sixth, Tenth, and Eleventh circuits, like the Ninth Circuit, have limited the scope of the “factor other than sex” language. The Ninth Circuit covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

Many states are taking action specifically to prohibit inquiries into or the use of salary history in setting pay. For example, California Labor Code section 432.3 (effective January 1, 2018) prohibits employers from seeking an applicant’s salary history in previous private sector employment, requires an employer to provide an applicant with the pay scale for the position upon reasonable request, and restricts how employers can use properly obtained salary history information. But the court’s opinion in Rizo means that, even in states within the Ninth Circuit that allow salary history inquiries, employers may not base pay decisions on that information.