Wyatt Employment Law Report

Should Salary History be History? Circuit Court Holds Past Salary History Cannot Justify Unequal Pay

By Sharon L. Gold

In Rizo v. Yovino, the Ninth Circuit Court recently held that an employer cannot use an employee’s prior salary history as a ‘factor other than sex’ upon which a wage differential may be used under the Equal Pay Act.  The EPA prohibits employers from paying women less for the same job unless the difference is based on merit, seniority, quantity or quality of work or the catchall “any other factor other than sex.”  The court held that salary history was not a legitimate factor that was related to the job, and instead, employers should use factors such as experience, training, education or prior performance to set wages.  The en banc decision was unanimous.

This decision comes amid several states banning salary history as a permissible factor upon which to base pay.  According to the Department of Labor, women in the U.S. make on average 82 cents to a dollar of what men make in comparable jobs.  Proponents of banning the “salary history” question claim that when asked to provide salary history, women take their prior, illegal wage disparity with them as an “anchor” for any future jobs – thereby continuing the cycle of wage disparity.  The states that currently ban the salary history question are:

  • California (also prohibits use of salary history even if information is volunteered)
  • Connecticut (may be voluntarily disclosed)
  • Delaware (may confirm past compensation after offer is extended)
  • Massachusetts (may confirm prior history if volunteered or after offer extended, pay history cannot be defense to discrimination claim)
  • New Jersey and New York (state agencies and offices)
  • Oregon (may ask after offer and cannot use this to set pay unless moving within the same employer)
  • Vermont (may be confirmed after job offer only if volunteered)

See more information here.  In addition to these states, several cities have banned the question as well.

Many companies have decided to voluntarily ban the salary history question, including Amazon and Bank of America.  Google, LLC, Facebook, Inc. and Cisco Systems, Inc. also stopped asking this question after California’s law became effective in January of this year.  Click here for more information.

The Sixth Circuit, which includes Kentucky, has yet to rule on this issue.  Kentucky does not currently ban the salary history question for applicants.  However, employers are urged to review their pay practices to make sure that they are fairly compensating applicants based on legitimate factors other than sex that are related to the job because equal pay claims are rising and costly claims.

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