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Use of Past Salary Justification for Pay Disparity Says California Court

California’s Ninth Circuit reversed a district court ruling in Rizo v. Yovino that held that an employer violated the Equal Pay Act because of its bright-line policy rule of paying new employees 5% more than their prior salaries. The district court agreed with the Equal Employment Opportunity Commission (EEOC), finding that basing compensation on an applicant’s prior compensation only furthers the wage gap between men and women, therefore, violating the Equal Pay Act. The Ninth Circuit disagreed and reversed.

Equal Pay Act

The Equal Pay Act (“Act”) prohibits sex-based wage discrimination between men and women in the same workplace who perform jobs that require substantially equal effort, responsibility, and skill under similar working conditions.

Penalties for an employer found to be engaging in discriminatory pay practices may include requirement to pay back wages, reinstatement or promotion of the individual, payment of future wages, monetary penalties, injunctive relief, and even imprisonment.

Case Facts

The case involved a female Fresno County public school employee who worked as a math consultant. Her prior salary was well below the average salary of other math consultants, even with the 5% increase, so she was paid on the low end of the pay range for the position. When the plaintiff discovered after being hired that certain male co workers, even those who were recent hires, were being paid significantly more than her at the time for the same work, she complained internally with the county. When the county defended the pay disparity, she filed a complaint with the EEOC under the Equal Pay Act.

The district court agreed the county’s internal pay practice was discriminatory and violated the Equal Pay Act. The Ninth Circuit disagreed, it did not set out a bright-line rule but instead noted use of prior salary was acceptable if the employer can show it effectuated a business policy that was reasonable in light of its purpose and other practices. The state of California has its own strict rule that states prior salary alone cannot justify pay disparity.

Pleasanton Employment Law Attorneys

It is likely that more equal pay claims will reach litigation in the coming years. As a result, it is important that employers audit their pay practices to protect against these claims. The skilled attorneys at Garcia & Gurney, ALC have years of experience representing California businesses in the Pleasanton and beyond. Call (925) 468-0400 today to schedule a consultation and learn about your business’s obligations under California and federal employment law.

The information contained in this article is provided by Garcia & Gurney, ALC (“G&G”) and is provided for educational and informational purposes only and should not be construed as legal advice or an offer to perform services on any subject matter. Recipients of this article should not act or refrain from acting on the basis of any information included in this article without seeking appropriate legal advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s state. G&G expressly disclaims all liability with respect to actions taken or not taken by the recipient based on any or all of the information or other contents in this article. This article not intended to constitute an advertisement for professional services or any other services. Nothing herein is intended to create an attorney-client relationship and shall not be construed as legal advice.

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