On April 9, 2018, the Ninth Circuit Court of Appeals held in Rizo v. Yovino, 887 F. 3d 453 that a female employee’s prior salary could not be used to justify payment of a lower wage to her in a new position. This decision comes on the heels of the January 1, 2018 addition of Labor Code section 432.3 (Bill No. AB 168) which prohibited employers from seeking salary history information, including compensation and benefits, from or about an applicant during the hiring process.
Gender-based wage discrimination has been prohibited since The Equal Pay Act was passed in 1963. The Equal Pay Act provides that the sexes may not be paid differently for equal work except where such payment is made pursuant to: (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) a differential based on any other factor other than sex. Employers have historically used prior salary history as a factor other than sex to justify unequal pay.
The California legislature has already established that salary history cannot serve as the only basis to justify a disparity in compensation. (Labor Code, §§432.3, 1197.5.) The Court has now gone a step further in the Rizo decision to hold that an employer is completely prohibited from using salary history to justify unequal pay, even when it is used in conjunction with other factors. The Court reasoned that allowing salary history to play any part in the determination of a person’s salary would serve to perpetuate a history of inequality. A current-day woman’s lower salary as compared to her male counterpart may be rooted in an era that predated the Equal Pay Act.
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