Tuesday, April 10, 2018

Prior Pay is Out Under Equal Pay Act Says 9th Circuit en banc

Readers of the blog have probably seen news articles about the Ninth Circuit's en banc decision yesterday in Rizo v. Yozino, a case interpreting the "any other factor other than sex" affirmative defense in the Equal Pay Act. If you haven't read the opnion(s) yet, I highly recommend it.

The facts were these. the Fresno County Office of Education based a new employee's entering salary solely on her prior salary plus 5%. After Aileen Rizo was hired, she discovered that male co-workers with the same job were paid more than she was and sued.

The only question on appeal was whether an employee's prior salary was "any other factor other than sex" such that an employer could base salary decisions on it without running afoul of the Equal Pay Act's prohibition on paying men and women different wages. The majority said no for two main reasons. First, if prior salary were a factor other than sex, then that exception would allow employers to rely on discriminatory wages set by prior employers, completely undercutting the Equal Pay Act's purpose. Second, the list of affirmative defenses prior to the any other factor affirmative defense all related to job-related factors that Congress recognized would justify different wages. Accordingly, and because motive is not relevant in equal pay act cases, "any other factor other than sex" must be limited to job-related factors. Prior salary may be based on job related factors, but employers must discover what those factors were and rely on them rather than simply using that salary as a proxy for those factors--that proxy is too inexact and may too easily embody discrimination.

There were three concurrence opinions. All of the judges agreed that relying solely on prior salary at another employer to set a starting salary ran afoul of the EPA because of the danger that the prior salary was based on sex. The concurring judges would have accepted prior salary as one factor in the mix, however, essentially believing that prior salary was likely based mostly on legitimate job-related factors.

This opinion marks a clear split among the circuits on this issue. The Seventh Circuit has held that prior salary is always factor other than sex, while the Ninth has now said it never is. The other circuits and the EEOC fall somewhere in the middle, more in line with the concurrences, that prior salary can be considered as just one factor as long as it is combined with other job-related factors.

I highly recommend reading all of the opinions. They do a great job summarizing the state of the law from the Supreme Court and the circuits. They also do a great job getting at the tensions in this area about causes of the gender wage gap, what kind of employer action constitutes discrimination, and what role the law should play. For example, one of the main points of disagreement seems to be whether the Equal Pay Act ought to be treated like disparate treatment pay under Title VII--what does it mean to say that a pay differential is because of sex? Additionally, is the persistent gender pay gap caused by that kind of motive, or is it based on other factors that are not attributable to an employer's bad motive. And should the government intervene in cases without bad motives?

The Equal Pay Act is not an area that I know as well as I would like, but I found this opinion and the concurrences to be a great discussion of equal pay issues writ large.



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