How Employers Can Legally Pay Women Less Than Men
The Court of Appeals held that using prior salary alone to calculate current wages can be permissible under the Equal Pay Act
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Last month, the U.S. Court of Appeals for the Ninth Circuit held that using prior salary alone to calculate current wages can be permissible under the Equal Pay Act as a "factor other than sex" if the defendant shows that its use of prior salary was reasonable and effectuated a business policy.
Aileen Rizo was hired in 2009 by Fresno County Office of Education (FCOE) in Fresno, California as a math consultant, a position it classifies as management-level. When the County hired Rizo, it used a salary schedule known as "Standard Operation Procedure 1440" to determine the starting salaries of management-level employees.
In 2012, Rizo learned that a male colleague who had recently been hired was placed at step nine on the county's 10-step pay scale. Rizo, who holds a master's degree and has 13 years of teaching experience, had been placed at step one on the scale when she began her job, even though she had more experience and seniority than her male colleague. She later learned that the other math consultants, all of whom were male, were paid more than she was. Rizo filed an internal complaint and was told that the "Standard Operation Procedure 1440" based new employees' salaries on just one factor: the employee's prior salary history. Based on that policy, the less experienced colleague was given a higher salary only because he had been paid more at his previous job than Rizo had been paid at her previous job.
Under the Equal Pay Act, the plaintiff has the burden of establishing a prima facie case of discrimination: "The Equal Pay Act creates a type of strict liability; no intent to discriminate need be shown." Thus, to make out a prima facie case, Rizo must show only that she is receiving different wages for equal work. She need not show that her employers intended to discriminate against her based on her sex. In 2014, Rizo eventually filed suit under the Equal Pay Act and California sex status discrimination statutes.
In their response, the County conceded that it paid Rizo less than comparable male employees for the same work. However, they claimed that this pay differential was not illegal because it was based on employees' prior salaries, which is a "factor other than sex."
The Fresno County Office of Education has offered four legitimate, non-discriminatory business reasons for the policy of starting salaries based primarily on prior salary:
- the policy is objective, in the sense that no subjective opinions as to the new employee's value enters into the starting-salary calculus;
- the policy encourages candidates to leave their current jobs for jobs at the County, because they will always receive a 5% pay increase over their current salary;
- the policy prevents favoritism and ensures consistency in application; and
- the policy is a judicious use of taxpayer dollars.
U.S. Court of Appeals for the Ninth Circuit held that an employer could pay men and women differently based on prior salary (or based on any other gender-neutral factor) if it showed that the factor was a business policy and that the employer used those factors reasonably. Since the Court of Appeals vacated the district court's order denying the County's motion for summary judgment, the district court must now evaluate the four business reasons offered by the County and determine whether the County used prior salary "reasonably in light of [its] stated purpose[s] as well as its other practices."