In April 2018, the Ninth Circuit Court of Appeals held in Rizo v. Yovino 1 that an employer cannot justify a wage differential between male and female employees under the Equal Pay Act by relying on the employee’s prior salary. This case was later overturned by the United States Supreme Court on a technicality, but the California Legislature passed AB 2282 to make the Ninth Circuit’s ruling California law. The Legislature amended California’s Equal Pay Act to confirm that prior salary shall not, by itself or in combination with other factors, justify any disparity in compensation.
California’s Equal Pay Act prohibits an employer from paying its employees less than employees of the opposite sex, or of another race, or of another ethnicity for substantially similar work.
Closing the gap in pay between genders has become a major issue in the US due in large part to the success of the MeToo and Times Up movements. Employers must be conscious of the law and make an effort to ensure everyone is paid equally for performing substantially similar work.
In Rizo v. Yovino,2 the plaintiff worked for the Fresno County Office of Education. Her salary was determined in accordance with the County’s Standard Operating Procedure (“SOP”), which had ten stepped salary levels, each level containing ten steps within it. Per the SOP, salary is calculated by taking the individual’s prior salary, increasing it by 5 percent, and placing the new employee in the corresponding step of the salary schedule. Several years into her job, plaintiff learned that her male counterparts had been placed at a higher salary steps when higher. This resulted in plaintiff being paid less than her male colleagues as the SOP was completely contingent on the employee’s prior salary.
The Ninth Circuit determined 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.” Allowing prior salary to be a permissible “factor other than sex” would “allow the County to defend a sex-based salary differential on the basis of the very sex-based salary differentials the Equal Pay Act was designed to cure.”
In summary, as women, and other protected groups, have historically been compensated less than male employees performing similar duties, a person’s prior salary cannot be used to justify paying them less. Employers must be conscious of equal pay and take steps to correct disparities in compensation.
If you believe that you are being paid less that your co-workers based on your gender, race, ethnicity or other protected characteristic, please contact our office today for a free consultation.