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    The Lawletter Blog

    EMPLOYMENT LAW: EPA Prohibits Using Prior Salary in Establishing Initial Pay

    Posted by Suzanne L. Bailey on Thu, Nov 29, 2018 @ 10:11 AM

    The Lawletter Vol 43 No 7

    Suzanne Bailey—Senior Attorney, National Legal Research Group

                The Equal Pay Act ("EPA") provides as follows:

                No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to . . . (iv) a differential based on any other factor other than sex[ .]

    29 U.S.C. § 206(d)(1) (emphasis added). 

                The Ninth Circuit Court of Appeals has stated that "[t]he [EPA] stands for a principle as simple as it is just: men and women should receive equal pay for equal work regardless of sex." Rizo v. Yovino, 887 F.3d 453, 456 (9th Cir. 2018) (en banc), pet. for cert. filed (Aug. 30, 2018), pet. for cert. docketed (Sept. 4, 2018).  The Act "'creates a type of strict liability' for employers who pay men and women different wages for the same work: once a plaintiff demonstrates a wage disparity, she is not required to prove discriminatory intent." Id. at 459 (citation omitted). The employer can avoid liability, however, by establishing one of the four affirmative defenses enumerated in the Act. In Rizo, the Ninth Circuit considered, en banc, whether prior salary was "a differential based on any other factor other than sex" within the meaning of the EPA that would permit an employer to escape liability for paying disparate wages to a female employee.

                The plaintiff, Aileen Rizo (“Ms. Rizo”), was hired as a math consultant by the Fresno County Office of Education. Her salary was determined by application of a standard operating procedure that directed that a new employee's salary "be determined by taking the hired individual's prior salary, adding 5%, and placing the new employee on the corresponding step of the [10-step] salary schedule.” Id. at 457. Based on a prior salary of $50,630 (for 206 working days), plus a $1,200 educational stipend for her master's degrees in educational technology and mathematics education, in her prior job as a middle and high school math teacher in Maricopa County, Arizona, the County offered Ms. Rizo "a salary of $62,133 for 196 days of work plus a master's degree stipend of $600" and placed her at step 1 of level 1 of the hiring schedule. Id. at 458. Three years later, she learned at a lunch with colleagues "that her male colleagues had been subsequently hired as math consultants at higher salary steps," prompting her to file a pay disparity complaint with the County. Id. She then brought suit in federal district court claiming, inter alia, a violation of the EPA.

                The County moved for summary judgment on the EPA claim on the ground that Ms. Rizo's prior salary was a factor other than sex that was permissibly considered in setting her entry salary. The district court denied the motion, reasoning that the County's standard operating procedure "necessarily and unavoidably conflicts with the EPA” and certified the question whether prior salary was a factor other than sex that could be considered in establishing salary.  On appeal, the three-judge panel held that the matter was controlled by Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982), which held that prior salary alone could constitute a factor other than sex, and "directed the district court on remand to consider the reasonableness of the County's proffered business reasons for its reliance on prior salary." Rizo, 887 F.3d at 459.

                The en banc court overruled Kouba and concluded "that past salary may not be used as a factor in initial wage setting, alone or in conjunction with less invidious factors." Id. at 468. Moreover, the court clarified, "unhesitatingly, that 'any other factor other than sex' is limited to legitimate, job-related factors such as a prospective employee's experience, educational background, ability, or prior job performance." Id. at 460. The court reached its determination based on the purpose of the statute, basic rules of statutory construction, and the legislative history of the EPA. In addition, the court noted that other federal appellate courts, including the Second and Eleventh Circuit Courts of Appeals, had found that "factor other than sex" was limited to job-related reasons. Id. at 465-66.  While there were no dissenting opinions, there were three concurrences that disagreed with the notion that prior salary can never be a factor other than sex that an employer may consider in setting an initial salary and pointed out that no other circuit had gone that far. 

                The County has filed a petition for writ of certiorari on the issue of whether prior salary is a factor other than sex within the meaning of the EPA, 29 U.S.C. § 206(d)(1)(iv), so the U.S. Supreme Court may have the final say on this issue.

    Topics: Suzanne Bailey, employment law, Equal Pay Act, prior salary use, wage disparity

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