One of the most hotly debated topics in employment law is whether basing employees’ salaries on past earnings is a sex-neutral policy or, instead, it amounts to pay discrimination. In Aileen Rizzo v. Jim Yovino, a pay discrimination case, the 9th Circuit Court of Appeals recently ruled that past earnings cannot justify pay disparities between women and men.
The appellate court’s decision reiterated that basing a female employee’s salary on her past earnings violates the Equal Pay Act of 1963 (EPA). The court wrote that the purpose of the EPA was to eradicate employers’ common practice of paying women less than men simply because of their sex. It continued that relying on past pay would contravene the purpose of the EPA—historically, women have widely been paid less than men because they are women, and basing a woman’s current salary on her past earnings is not a sex-neutral practice.
In Rizzo, the court explained that Fresno County, where Ms. Rizzo was a math consultant, based employees’ salaries mainly on past earnings. At a lunch with colleagues, Ms. Rizzo learned that a male who had just started work as a math consultant made significantly more than she did, although she had been in her position for three years. Ms. Rizzo soon realized that she was the only female math consultant with the county and that she earned significantly less than all males in the same position, although she had more education and experience.
To establish a prima facie case of pay discrimination, a plaintiff must show
·     that she was paid less than male employees
·     for substantially similar work
·     performed under similar working conditions.
After a plaintiff proves her prima facie case, the burden then shifts to the employer to prove an affirmative defense under one of four exceptions to the EPA. These defenses are that the pay difference was based on:
·     a seniority system;
·     a merit system;
·     a system that measures earnings on quality or quantity of production; or
·     any other factor other than sex.
Rizzo established her prima facie case, and the county argued that basing pay on past wages falls under the fourth affirmative defense and is a factor other than sex.
The court held that based n the text and purposes of the EPA, only job-related factors other than sex fall under the fourth affirmative defense.
The court reasoned that, among other things, the fact that the first three affirmative defenses all relate to a plaintiff’s current job indicates that the fourth defense must also relate to the plaintiff’s current job, so the fourth affirmative defense only includes job-related factors other than sex.
Further, the court held that allowing prior pay to justify paying women and men differently for substantially similar work would undermine the purpose of the EPA. Using prior pay to excuse pay disparities could continually perpetuate the pay discrimination that the EPA sought to eradicate. “Because prior pay may carry with it the effects of sex-based pay discrimination,” the court wrote, “and because sex-based pay discrimination was the precise target of the EPA, an employer may not rely on prior pay to meet its burden of showing that sex played no part in its pay decision.” Therefore, the court held, prior pay is not a job-related factor other than sex, is not sex-neutral, and does not fall under any affirmative defense under the EPA.
The 9th Circuit’s decision is a step forward in eliminating pay discrimination. Indeed, basing unequal current salary on unequal past salary perpetuates wage discrimination and contravenes the purpose of the EPA. While wage discrimination is still far too prevalent in the workplace, it can be difficult to know how to fight against this unjustified difference in pay. Our free EPA e-book can help employees understand their rights and recourses under the Act.