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9th Circuit: EPA requires ignoring past pay

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in Discrimination and Harassment,Human Resources

Under the Equal Pay Act, members of one sex must be paid the same as members of the opposite sex for doing the same or comparable work. Litigation over the years has often focused on the major employer defense to an EPA claim: If they can prove that a reason other than sex caused disparate pay, there’s no case.

One rationale long considered to be legal: Paying a new hire less than a current employee because the new hire previously earned less.

However, for just as long, employees’ attorneys have argued that using past pay to set a new starting salary perpetuates past discrimination against women who may have suffered from previous sex discrimination. Thus, the argument goes, employers that set pay based on past salaries are just as guilty of sex discrimination as those past employers who set a discriminatory rate of pay in the first place.

Recent case: The Fresno, Calif., County Office of Education hired Aileen to train educators on how to better teach math. Aileen learned that a male co-worker with less experience doing the same job earned significantly more than she did. When she challenged the county, it argued it had set her salary based on previous salary—a reason other than sex that explained the pay disparity.

The 9th Circuit rejected that argument. It wrote, “We now hold that prior salary alone or in combination with other factors cannot justify a wage differential.” The court added, “The Equal Pay Act 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. Fresno County, 9th Cir., 2018)

Note: The 9th Circuit covers Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Northern Mariana Islands, Oregon and Washington. Unless overturned on some future appeals, this decision is binding on employers in those jurisdictions

Advice: If you have employees in those states and territories, review your hiring policies in light of this ruling. Remove any guidelines or rules that set salaries based on past pay. Revamp handbooks, policies and applications to remove any reference to past pay.

Remind hiring managers that they should never consider past pay when setting starting pay for new employees.

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