4/11/2018 Ninth Circuit Finds Employers Cannot Use Prior Salary History to Determine Wages

On April 9, 2018, the Ninth Circuit issued a decision in Rizo v. Yovino, — F.3d — (9th Cir. 2018), which overturned longstanding case law that permitted employers to use a job applicant’s prior salary to determine his or her wages.  In the case, a math consultant for the Fresno County Office of Education alleged that the County had violated the Equal Pay Act (“EPA”) by relying on her prior salary to justify paying her a lower wage than her male counterparts.

Pointing to the court’s prior case law, the County argued that its policy of using an employee’s salary history to set his or her wages was lawful under the EPA because it was based on the catchall exception to the statute: “a factor other than sex.”  A three-judge panel of the Ninth Circuit, relying on precedent in Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982), sided with the County, finding that salary history alone could constitute a “factor other than sex.”  But the Ninth Circuit, in an en banc review, disagreed.  It held that an employee’s prior salary does not constitute a “factor other than sex” because women’s prior salaries are a product of a historically discriminatory job market that tended to pay them less.  The court concluded that a legitimate “factor other than sex” under the EPA must be job-related and that prior salary cannot justify paying one gender less if equal work is performed.

The Ninth Circuit’s decision in Rizo is reminiscent of a recent change to the California Labor Code, which now bars employers from seeking any salary history information, including compensation and benefits, from job applicants.  To view the court’s Rizo opinion, click here.