9th Circuit: Basing pay on past salary perpetuates discrimination

Here in California, employers are prohibited from asking job applicants about their salary histories. With women making about 82 cents for every dollar a male peer makes, we need a way to close the pay gap. When wages and salaries are based on past pay rates, any discrimination a woman experiences at any point in her career can be locked in, giving her a lower income permanently.

The impact of discrimination in pay has not only effected women, but members from various racial and ethnic minority groups. Our legislature has made great efforts to narrow the pay gap in having the broadest and most expansive equal-pay laws in the country.

In 2016, the California Fair Pay Act was expanded to state that "prior salary cannot, by itself, justify any disparity in compensation." However, a new bill was passed last year that goes even further by prohibiting employers, "orally or in writing, personally or through an agent," from asking about an applicant's previous pay. Employers can still base a job offeree's pay on their prior salary as long as the person discloses the salary history voluntarily and without prompting. That could be changing.

Violates the Equal Pay Act

The 9th Circuit Court of Appeals has just ruled that basing job offerees' pay on their prior salary history violates the federal Equal Pay Act.

The Equal Pay Act prohibits basing pay on gender-specific factors. Merit and seniority systems are acceptable, as are those based on the quantity or quality of work. The law leaves open the possibility of an acceptable system leaving "a differential based on any other factor other than sex."

In the case before the court, an Arizona math teacher was hired as a math consultant by Fresno County. By policy, her salary was set at 5 percent above her previous salary. Later, she discovered that her male colleagues were paid more than she was, and sued. Fresno's superintendent defended the district's pay policy as gender neutral.

"To accept the county's argument would be to perpetuate rather than eliminate the pervasive discrimination at which the [EPA] was aimed," wrote the court.

Since California is in the 9th Circuit, this ruling applies directly to us. Other federal circuits, however, have made different rulings. The 7th Circuit found that past earnings are an acceptable basis for a new hire's wages as long as there is no evidence of discrimination. The 10th and 11th circuits, on the other hand, have said that salary history is an acceptable factor but cannot be the only factor.

The California Fair Pay Act

The California Fair Pay Act says that employers cannot rely on salary histories to justify a disparity in pay.

What remains unclear is whether a person's previous pay can be used at any point in salary negotiations, even after an offer has been made. The 9th Circuit intentionally reserved that question for future consideration.