In a case sure to engender plenty of water cooler discussion, the Ninth Circuit Court of Appeals has ruled that employers can't pay women less than men just because they made less at a previous job. The court noted that the continuing gender pay gap is "an embarrassing reality of our economy." The court’s opinion held that a woman's prior salary, whether considered on its own or along with other factors, can't be used to justify paying a female employee less than her male counterpart. To do so perpetuates discrimination, the court's majority opinion said.
It has been well published that in the United States, women earn on average 79 cents for every dollar earned by men. Citing studies that show American women lose a whopping $840 billion annually because of the wage gap, the court wrote, "If money talks, the message to women costs more than 'just' billions: Women are told they are not worth as much as men."
The court's interpretation of the Equal Pay Act overturns a ruling that had stood since 1982. That precedent viewed an employee's pay history as one of the federal law's catchall exceptions that are "based on any other factor other than sex." Employers that relied on a woman’s prior salary history were not subject to a discrimination suit. A full 11-judge panel of the Ninth U.S. Circuit Court of Appeals disagreed.
The court held that allowing employers to justify paying a woman lower wages based on her salary history stood the Equal Pay Act on its head: the point of the Equal Pay Act is to eliminate long-standing pay disparities, not to preserve them. The court held that the statute’s catchall exception of acceptable factors that the employer can rely on should be "limited to legitimate, job-related factors such as a prospective employee's experience, educational background, ability, or prior job performance." In effect, allowing a woman’s prior salary history to be a legitimate factor in paying her less than men would simply bless the unlawful discrimination of her prior employers, and excuse discrimination by her current employer.
The plaintiff employee, Ailene Rizo, was a math consultant hired by the Fresno County public schools. She learned during a lunch with her colleagues that she was being paid substantially less than men hired after her.
In an interview, Rizo was plain spoken about the pernicious effects that a woman’s salary history have on a woman’s future earnings. "I couldn't educate myself out of being paid less, I couldn't get more experience or be in the job market longer to break that cycle," Rizo said. "Because low wages will follow you wherever you go as long as someone keeps asking you how much you were paid."
The Fresno County school supervisor vowed to appeal the decision to the United States Supreme Court. This case bears watching because it may have the effect of helping erase the wage disparities suffered by female employees.
Many states are making it unlawful for employers to ask for an employee’s prior salary history in any event, acknowledging the impact that such a question has on wage gaps for women and minorities. Men, too, will benefit from such a change, as the salary set by an employer is more closely tied to the skills required by the job at hand, rather than what an employee was paid at his or her last job.