Wednesday, April 11, 2018

9th Cir.: Prior salary is no defense to an Equal Pay Act claim

Earlier this week, the Ninth Circuit issued its opinion in Rizo v. Yovino.

The Equal Pay Act generally requires men and women to receive equal pay for equal work. Defining "equal work" can be tricky, but the statute directs us to look to whether the work requires "equal skill, effort, and responsibility, and which [is] performed under similar working conditions." Sounds simple enough, but there are a million (rough estimate) legitimate reasons why employer may pay two people who do substantially equal work different wages.

Not official use.
That's where the EPA's exceptions come in. The statute specifically names three:
(i) a seniority system; 
(ii) a merit system; [and] 
(iii) a system which measures earnings by quantity or quality of production.
But wait! There's one more . . . "(iv) a differential based on any other factor other than sex." We call this last one the "catchall." However, the "catchall" does not in fact catch *all*, and "any factor other than sex" does not really include *any* factor other than sex.

The Ninth Circuit held:
[W]e now hold that prior salary alone or in combination with other factors cannot justify a wage differential. To hold otherwise—to 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.
That is an extraordinarily broad holding. As a concurring opinion points out:
[T]he majority unnecessarily, incorrectly, and contrary to Supreme Court precedent, insists that prior salary can never be a factor in a pay system that falls within the fourth exception to the Equal Pay Act. Accordingly, I concur separately because following the Supreme Court’s guidance, I agree with the Tenth and Eleventh Circuits, as well as the EEOC, the agency charged with enforcing the EPA, that prior pay may be a component of a pay system that comes within the fourth exception recognized in 29 U.S.C. § 206(d)(1). A defense to a pay discrimination claim will lie if the employer meets its burden of showing that its system does not perpetuate or create a pay differential based on sex. We should not have reached out to hold otherwise, particularly as there was no need to do so.
We will see whether the breadth of the holding catches the eye of the Supreme Court.