prior salary

“Judges Are Appointed For Life, Not For Eternity”: SCOTUS Rules That Judge’s Vote in Equal Pay Case Does Not Count Due To Judge’s Passing

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

Congressional Dems Reignite 20-year Battle to Pass the “Paycheck Fairness Act.”

For the last two decades, Congressional Democrats have attempted to pass the Paycheck Fairness Act. Beginning with the 105th Congress in 1997-98, several legislators have introduced versions of the act, including then-Senator Hillary Clinton in 2005. Following their newly won majority in the House of Representatives, Democratic lawmakers recently re-introduced the Paycheck Fairness Act on January 30, 2019. The proposed bill, H.R. 7, was introduced by Representative Rosa DeLauro (D) and appears to have considerable Congressional support. Notably, cosponsors of H.R. 7 include every Democratic member of the House of Representatives and forty-five Senators. READ MORE

New Year & New Law: Hawaii’s Ban on Prior Salary History Goes into Effect on Jan. 1st

On January 1, 2019 at the stroke of midnight, Hawaii joined a growing list of states and municipalities to ban prospective employers from asking applicants about their prior salary history.  As we have previously reported, several other jurisdictions have already passed similar laws that place restrictions on salary history during the application process, including California, New York City, Westchester, and Suffolk County, New York. READ MORE

Business Groups Urge U.S. Supreme Court to Review Ninth Circuit Decision Rejecting Use of Prior Salary to Set Pay

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.

Connecticut Soon to Join The Prior Salary Ban(dwagon)

Connecticut Governor Dannel Malloy is poised to sign into law the Act Concerning Pay Equity bill, which has been passed by both the Connecticut House and Senate General Assembly.  In what Governor Malloy referred to as “commonsense legislation” to address pay equity concerns, the Connecticut bill would prohibit an employer, or a third party acting on the employer’s behalf (like a recruiting firm), from inquiring about a prospective employee’s wage and salary history unless voluntarily disclosed by the applicant.  The bill does permit an employer to inquire about other components that contributed to the applicant’s previous total compensation package, but not about the value of those items.  Although no examples are provided in the legislation, it would seemingly be permissible to ask whether a prospective employee received stock options at their previous employment, but not the value of those options. READ MORE

School’s Out! Ninth Circuit Holds Prior Salary of Teachers Can Justify Pay Differentials

As schools across the country prepare for summer break, the Ninth Circuit overturned a lower court decision against the Fresno County public school district which had found that its pay practices were unlawful. Notably, the Ninth Circuit held that an employer may rely on prior salary 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.’” READ MORE

Fair Enough? New Equal Pay Legislation Expands California’s Fair Pay Act

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.

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