In April, the Ninth US Circuit Court of Appeals ruled in an en banc rehearing of a case decided by a three-judge panel last year that differences in past salaries don’t justify disparities in pay between male and female employees in the same role. The unanimous ruling, authored by the late Judge Stephen Reinhardt, concluded that even though the Fresno, California, school district’s pay structure was not discriminatory in intent, it perpetuated gender-based wage disparities in a manner “contrary to the text and history of the Equal Pay Act.”
Because pay gender disparities in pay may have arisen from sex discrimination, the court reasoned, a system that allows these gaps to persist throughout an employee’s career effectively functions to “perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.” The Ninth Circuit’s judgment is in keeping with a trend that has been building up over the past few years in which employers are feeling greater pressure to stop basing pay structures on salary history, due to the potential for perpetuating unfair pay gaps. Appeals courts have divided on the question, however, with the 10th and 11th Circuits also finding that salary history-based pay systems are not exempt from Equal Pay Act claims, while the Seventh and Eighth Circuits have disagreed.
A circuit court split is often a prelude to Supreme Court review of a legal question. The Fresno school district had planned to appeal the Ninth Circuit’s ruling to the highest court, but had suspended that process while it attempted to reach a settlement with the plaintiff, Aileen Rizo. Now, however, the settlement talks have broken down and the district is preparing to petition the Supreme Court for review next month, Erin Mulvaney reports at the National Law Journal. That doesn’t mean the court will take the case, Mulvaney notes, but “any petition would likely fuel friend-of-the-court briefs”:
Connecticut Governor Daniel Malloy signed a bipartisan bill into law on Tuesday that will restrict employers in the state from asking candidates for their salary histories, the CT Post reported:
Called the pay equity bill, the new law prevents employers from asking job candidates about their salary history before extending them an offer. Supporters say that question often results in lower starting pay for women and people of color. In 2016, Connecticut women made 79 cents on the dollar compared to men, according to the National Women’s Law Center. Over a lifetime, women made $529,160 less than their male counterparts, on average.
Connecticut’s new law leaves some questions unanswered for employers, Proskauer attorneys Allan Bloom and Laura Fant note in a more detailed overview of the ramifications for employers. The law permits employers to ask about “other elements of a prospective employee’s compensation structure” than wages, but not the value of those elements. The law does not define the scope of these other elements, however, so Connecticut businesses may seek clarification on this question from the state’s labor department.
With the signing of this law, which goes into effect January 1, Connecticut will becomes the sixth US state to ban salary history inquiries: Massachusetts was the first to do so in 2016 (though the effective date of that law has been delayed until July 1 of this year), followed by California, Delaware, Oregon, and most recently Vermont. New York Governor Andrew Cuomo has also put forward a bill that would ban these inquiries. New Jersey’s recently-enacted equal pay law does not prohibit them, but makes it easier for employees to demonstrate pay discrimination in a lawsuit.
Vermont Governor Phil Scott signed legislation on May 11 that will bar employers from asking job candidates about their salary histories during the recruiting process, Littler Mendelson attorney Joseph A. Lazazzero reports at Lexology:
The new law, H. 294, effective July 1, 2018, prohibits asking a prospective, current, or former employee about or seeking information regarding his or her compensation history. For these purposes, compensation includes base compensation, bonuses, benefits, fringe benefits, and equity-based compensation. Under the new law, employers are also prohibited from requiring that a prospective employee’s current or past compensation satisfy minimum or maximum criteria for employment. If an employer discovers a prospective employee’s salary history, the employer may not determine whether to interview the prospective employee based on this information.
Like similar prohibitions in other states, Vermont’s new law still allows employers to confirm a candidate’s past pay if the candidate discloses it voluntarily, as well as to ask about candidates’ salary expectations. When the bill was introduced in the state legislature in January, its sponsors told Vermont Public Radio that it would help close the state’s gender pay gap, which stands at around 16 percent for full-time workers. The original bill also instructed the Vermont Department of Labor to collect new data on gender pay disparities in the state, VPR reported at the time, but this provision does not appear in the final bill signed by Scott last week.
Downtown Philadelphia (OAnderson/Shutterstock)
A federal judge has partly struck down the ban on salary history inquiries passed by the city of Philadelphia last year, ruling that a prohibition against asking candidates about their past earnings infringes employers’ First Amendment right to free speech. However, US District Judge Mitchell S. Goldberg concluded in his ruling, issued Monday, that the city did have a right to bar employers from basing salary offers on that information as a means of combating wage discrimination:
I conclude that the City’s Inquiry Provision violates the First Amendment. Although the Ordinance represents a significant positive attempt to address the wage gap, the First Amendment compels me to enjoin implementation of the Inquiry Provision. The Reliance Provision, however, does not offend the First Amendment and remains intact.
Accordingly, Joseph DiStefano reported at the Philadelphia Inquirer, both the Chamber of Commerce for Greater Philadelphia, which pursued the lawsuit, and the city found something to celebrate in Monday’s ruling. DiStefano gets a local attorney’s take on what it means for employers:
Under Goldberg’s ruling, “employers have to be careful. You can ask for their prior salary. But, once you know the salary, it’s very difficult to ‘unring that bell,’” and claim there was no discrimination, if employees later find they were underpaid relative to others in the same job, [Tracey Diamond, an employment lawyer at Pepper Hamilton LLP,] added.
Paul Brady Photography/Shutterstock
New York State Governor Andrew Cuomo on Tuesday announced the introduction of a bill that would ban all public and private employers who do business in the state from asking job candidates about their prior compensation. The legislation, advanced on Equal Pay Day, coincided with the release of a report (pdf) from the state’s Department of Labor on the status of the gender pay gap in New York and how to close it. Banning salary history questions on job applications is just one of the reports wide-ranging policy recommendations:
This new legislation builds on two executive orders signed by the Governor last year to eliminate the wage gap by prohibiting state entities from evaluating candidates based on wage history and requiring state contractors to disclose data on the gender, race and ethnicity of employees – leveraging taxpayer dollars to drive transparency and advance pay equity statewide. Today’s legislation builds on legislative efforts to address the issue and broadens the scope of Executive Order #161 to encompass all employers, not just state entities, in order to break the cycle of unfair, unequal compensation.
The report found that women in New York earn 89 cents for every dollar earned by men—a narrower pay gap than the national average of around 80 cents to the dollar:
Differences in past salaries are insufficient to justify disparities in pay between male and female employees in the same role, the Ninth US Circuit Court of Appeals ruled on Monday. In an en banc rehearing of a case decided by a three-judge panel nearly a year ago, the court’s 11 judges unanimously ruled in favor of Aileen Rizo, a California school employee who learned in 2012 that her male counterparts were making more than she was and filed a discrimination suit under the Equal Pay Act.
The panel last year, citing a 1982 ruling by the court that said employers could use salary history information as long as they applied it reasonably, had overturned a 2015 decision by US Magistrate Judge Michael Seng, which held that the Fresno, California, school district’s pay structure perpetuates gender-based wage disparities. Monday’s opinion, authored by the late judge Stephen Reinhardt before his death last month, reaffirmed Seng’s ruling, concluding that ” allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands”:
We conclude, 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. It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing “endemic” sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities—disparities that Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.
Reinhardt’s opinion will cheer critics of salary histories, who argue that using this information to set pay enables the persistence of unjustifiable gender-based pay gaps throughout an employee’s career.
Last week, Michigan Governor Rick Snyder signed into law a bill preempting local governments within the state from regulating the questions employers are allowed to ask candidates during job interviews. The broad anti-regulatory measure is aimed specifically at restricting local ordinances prohibiting inquiries about candidates’ salary histories, Jackson Lewis attorneys Stacey A. Bastone and K. Joy Chin observe at the firm’s Pay Equity Advisor blog, reinforcing a 2015 law that prohibited local administrations from banning these questions on job applications:
At the time of the bill’s signing, no municipality in the state had proposed an ordinance restricting pre-employment inquiries into salary history. Proponents of the bill contend that asking about an applicant’s past or current salary is a standard business practice and assists employers in budgeting. Opponents argue that soliciting salary history can perpetuate discriminatory pay gaps. …
Wisconsin’s legislature is also poised to pass similar legislation, they note, which Governor Scott Walker is expected to sign. Michigan and Wisconsin here are employing a legislative tactic that has become increasingly common in the past year among states with conservative governments to prevent their more liberal cities from implementing their own, more progressive employment regulations. At the same time, other, more liberal states are pursuing more employee-friendly labor regulations, including higher minimum wages, paid family leave and sick leave mandates, restrictions on the use of non-compete agreements, and even protections for employees who use marijuana in states where the drug has been legalized.
When it comes to salary histories, these midwestern states with Republican governors are going against the prevailing trend. Bans on these inquiries have been passed in California, Delaware, Massachusetts, Oregon, Puerto Rico, New York’s Albany County, New York City, and San Francisco, while 14 other states are considering them.