Federal Court: Gender Pay Gaps Based on Salary History Not Discriminatory

Federal Court: Gender Pay Gaps Based on Salary History Not Discriminatory

In a decision that could complicate efforts by pay equity advocates to close the gender pay gap by banning salary history inquiries in recruiting, the Ninth US Circuit Court of Appeals ruled on Thursday that employers could legally pay female employees less than men for the same work, provided that these pay gaps were the result of differences in their past salaries, the Associated Press reports. The high court overturned a 2015 ruling by US Magistrate Judge Michael Seng, which found that pay gaps based on salary history violated the Equal Pay Act as the lower salaries women earned earlier in their careers were likely due to gender bias:

A three-judge panel of the 9th Circuit cited a 1982 ruling by the court that said employers could use previous salary information as long as they applied it reasonably and had a business policy that justified it. … The 9th Circuit ruling came in a lawsuit by a California school employee, Aileen Rizo, who learned in 2012 while having lunch with her colleagues that her male counterparts were making more than she was.

Her lawyer, Dan Siegel, said he had not yet decided the next step, but he could see the case going to the U.S. Supreme Court because other appeals courts have decided differently. “The logic of the decision is hard to accept,” he said. “You’re OK’ing a system that perpetuates the inequity in compensation for women.” …

Rizo’s employer, Fresno County public schools, determines pay by offering candidates a 5 percent increase over their current or previous salary, which the county described to the court as a standard that avoided subjective compensation determinations and also served as an incentive for candidates to work for the county. In Rizo’s case, the 5 percent bump was not enough to meet the minimum salary for her position, so she received an additional increase.

The Ninth Circuit panel has sent the case back to Judge Seng to consider the county’s justifications for using salary history in setting compensation offers. As the ruling is only effective in the Ninth Circuit’s jurisdiction, it cannot be used to challenge blanket bans on salary history inquiries in other parts of the country, but these bans are also facing legal hurdles: Just this week, Philadelphia agreed to hold off on enforcing a ban enacted earlier this year while a lawsuit challenging it made its way through the courts.