9th Circuit: Employers can base pay on unjust salary histories

Posted by David J. SteeleMay 05, 20170 Comments

Not everything in the workplace that is unfair is also illegal. That's a crucial tenet to remember about employment law, and it comes into play more than you might guess.

Consider a recent ruling by the U.S. Court of Appeals for the Ninth Circuit, which covers Montana. In the recent case of Rizo v. Yovino, the held that if a company has a reasonable business policy of using salary history as the basis for current pay levels, that employer can end up paying men more than women but it would not be discrimination, necessarily.

Under the federal Equal Pay Act, salary history can be a factor in determining current and future pay. However, it is only legitimate if it “effectuate[s] some business policy” and the employer acts “reasonably in light of [its] stated purposes as well as its other practices.”

In other words, the employer's actual motive is an important consideration, and the appellate court sent the case back to the trial courts for a hearing on the legitimacy of the employer's business reasons.

School math consultant discovers she makes over $16,000 less than male colleague

Rizo v. Yovino involved a female math consultant with 13 years of experience who was hired in 2009 by the Fresno Unified School District at a starting salary of $62,733. In 2012, she learned that a male math consultant had just been hired at a salary of $79,000. Indeed, as she soon discovered, all of her male colleagues made more than she did.

She sued the Fresno USD, which raised the defense that it made its salary decisions based not on discriminatory reasons but on each new hire's salary history, and that it was not responsible for any systemic trends that push women's wages lower.

That's true, although more is required. If employers could win by merely claiming they had reasons other than discrimination for their policies, they would win a lot more often. Instead, they have to bring forward sufficiently convincing evidence that this is the case.

The case is now before the lower court, which must determine whether the Fresno USD can show that. If not, the case could still go to the plaintiff.

“The logic of the decision is hard to accept,” said the woman's lawyer. “You're OK'ing a system that perpetuates the inequity in compensation for women.”