In April 2018, an en banc Ninth Circuit held in Rizo v. Yovino that an employer cannot justify a wage differential between male and female employees under the Equal Pay Act by relying on prior salary. Before the Ninth Circuit published its decision, though, Judge Stephen Reinhardt passed away. On February 25th, the U.S. Supreme Court vacated the Ninth Circuit’s decision, reasoning that the appellate court should not have counted Reinhardt’s vote because he passed away before the decision was issued. Instead, the Ninth Circuit should not have released the opinion. READ MORE
Echoing an increasingly familiar refrain, another district court has declined to certify a class of women bringing pay equity claims on the basis that they did not present a common question capable of producing a common answer to “the crucial question why was I disfavored.” Relying largely upon Wal-Mart Stores, Inc. v. Dukes, the court found certification inappropriate because the putative class members were subject to countless independent decisions involving the judgment and discretion of individual managers. The case also serves as another reminder that courts (including California state courts) will not accept an overly simplistic analysis comparing broad job categories or titles, but will continue to look at actual business practices and job responsibilities to ensure comparators are “similarly situated” so a meaningful pay comparison can be made. READ MORE
In recent years, the volume of equal pay lawsuits has continued to increase in Silicon Valley, despite technology companies reaffirming their commitment to equal pay policies and practices. Earlier this month, Hewlett Packard Enterprise Co. (“HP”) was hit with the latest equal pay lawsuit. The class action lawsuit, filed in Santa Clara Superior Court, alleges that HP discriminated against its female workers by paying them less than their male counterparts and funneling women into certain jobs based on stereotypes. READ MORE
In the wake of the Ninth Circuit’s decision in Rizo v. Yovino, key employer-side groups have expressed support for U.S. Supreme Court review to determine whether employers who rely on prior salary to set starting pay can continue to do so consistent with the federal Equal Pay Act, 29 U.S.C. § 206(d)(1) (“EPA”).
The EPA prohibits sex-based wage differentials between men and women who perform equal work, but allows employers to justify wage differentials even between such employees based on seniority, merit, production, or “any other factor other than sex.” The Ninth Circuit’s recent en banc decision in Rizo held that “prior salary alone or in combination with other factors cannot justify a wage differential” because prior salary is not a “factor other than sex.” 887 F.3d 453, 456 (9th Cir. 2018). The Ninth Circuit reasoned that a “factor other than sex” must be “job-related,” and thus rejected the defendant employer’s exclusive reliance on prior salary as a benchmark against which to set starting pay for new hires. The Court, however, left open the possibility that prior salary could permissibly “play a role in the course of an individualized salary negotiation.” Id. at 461. (For a comprehensive analysis of the Rizo decision, see Can Prior Pay Inform a New Hire’s Salary? (Daily Journal, May 11, 2018)).
On August 30, 2018, the Fresno County Superintendent of Schools, Jim Yovino, filed a petition for writ of certiorari asking the Supreme Court to review the Ninth Circuit’s decision in Rizo. The petition argued that the U.S. Supreme Court should grant review because the Circuit Courts of Appeal diverge on whether prior salary is a “factor other than sex” (see, e.g., Wernsing v. Dep’t of Human Servs., State of Illinois, 427 F.3d 466, 469 (7th Cir. 2005)) and because prior salary is a “factor other than sex” under a plain reading of the EPA.
Since Yovino’s petition for writ of certiorari, several business groups have filed amici curiae briefs urging the U.S. Supreme Court to accept the case. The Chamber of Commerce of the United States of America (Chamber) and the Society for Human Resource Management (SHRM) recently filed a brief for amici curiae in support of Yovino. The Chamber is the world’s largest business federation, representing the interests of 300,000 members and over three million companies and professional organizations. SHRM is the world’s largest human resources professional society, representing 300,000 members in more than 165 countries. Representing strong business interests, the amici brief asserts that the question of whether employers can rely on prior salary history in setting workers’ wages “is of extraordinary significance.” The amici brief argues that the Rizo decision deepens a circuit split on the legality of the widely-used and useful employment practice of relying on prior salary, which is legal in most jurisdictions and is a facially sex-neutral practice. The Chamber and SHRM also argue that the Ninth Circuit’s “tortured reading of the EPA’s catchall defense” could be read to call into question other legitimate and sex-neutral practices that rely on objective information, such as individualized negotiations and competitive salary bidding.
The Center for Workplace Compliance (CWC) and the National Federation of Independent Business (NFIB) Small Business Legal Center also filed a brief for amici curiae in support of Yovino’s petition. The CWC, whose membership includes 240 major U.S. corporations, is the nation’s largest nonprofit association of employers dedicated exclusively to ensuring compliance with fair employment and other workplace requirements. The NFIB is the nation’s leading small business association, with offices across the country. The CWC and NFIB argue that the “Ninth Circuit’s decision  rests on a legally flawed premise—that an employer has an affirmative obligation under the EPA to eliminate disparities in pay, even when those disparities are caused by gender-neutral compensation policies.” The amici brief asserts that review of the Rizo decision is necessary to “resolve issues of substantial importance to the employer community,” and that permitting the decision to stand “will have a profound, largely negative, impact on employers nationwide.”
The U.S. Supreme Court will likely issue a decision on the petition for writ of certiorari later this year. Until then, it remains unclear whether Rizo will remain the guiding precedent in the Ninth Circuit. For employers operating in California, Rizo may not prompt significant changes given that the California Equal Pay Act separately provides that “prior salary shall not, by itself, justify any disparity in compensation.” But employers elsewhere in the Ninth Circuit will need to evaluate their pay practices in light of Rizo unless and until it is overruled. Experienced counsel can assist employers in navigating these complex issues.
This summer, California pay data reporting bill SB 1284 appeared to be progressing quickly through the legislature, until it was tabled by the Assembly Appropriations Committee on August 16, 2018. The bill, which we reported on earlier this year, would have required employers with 100 or more employees to annually report pay data from employees’ W-2 forms for specified job types and pay bands, broken down by sex, race, and ethnicity. The bill passed the Senate, and was working its way through the Assembly, where it was amended earlier this month. READ MORE
This month, the California Senate held a hearing regarding SB 1284, which would require California employers with at least 100 employees to annually report certain demographic pay data to the Department of Industrial Relations (DIR). Notably, this bill was sponsored by Senator Hannah-Beth Jackson, who also sponsored California’s Fair Pay Act (FPA) (on which we previously reported here, here, here, and here). It was also introduced just a few short months after the Office of Management and Budget’s memo mandating a review and immediate stay of similar reporting requirements at the federal level for the Equal Employment Opportunity Commission (EEOC)’s revised EEO-1 form. The California Senate Judiciary Committee has explained that SB 1284 is “modeled closely” on the revised EEO-1 form. As a result, it suffers from similar flaws. READ MORE
Last year, we covered a Ninth Circuit panel decision which concluded that an employer may rely on prior salary information as an affirmative defense to claims under the federal Equal Pay Act (“EPA”) if “it show[s] that the factor ‘effectuate[s] some business policy’ and that the employer ‘use[s] the factor reasonably in light of the employer’s stated purpose as well as other practices.’” An en banc Ninth Circuit has now reversed the panel’s prior opinion. READ MORE
On January 11, 2017, the German Federal Cabinet has adopted the Equal Pay Act (Entgelttransparenzgesetz) submitted by the German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth.
As we reported, the requirements of the Equal Pay Act as now adopted have been lessened in comparison with the preliminary ministerial draft we initially reported on, in accordance with the agreement found by the coalition committee of the German government parties.
Still, the Federal Minister for Family Affairs, Senior Citizens, Women and Youth declared the adoption of the Equal Pay Act an important breakthrough for a fair payment of women. She announced that the individual right to information, the reporting obligation and review procedure can be expected to change corporate culture in Germany.
On October 6, 2016, the coalition committee of the German government parties agreed on the planned Equal Pay Act (Entgeltgleichheitsgesetz). We described the first draft of the Equal Pay Act submitted by the German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth in our blog post earlier this year.
Just less than a year ago, California adopted the Fair Pay Act (“FPA”), which took effect on January 1, 2016 and created some of the strongest equal pay protections in the nation. On September 30, 2016, Governor Jerry Brown signed two bills that expand the law even further.