Developments In Equal Pay Litigation - 2022 Update

© 2022 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 35 applicants will not take the job. On the other hand, some courts and commentators have argued that paying employees based on past earnings only perpetuates a systemic gender pay gap that persists in the labor force. There is little debate as to whether prior history can be used at all ; courts recognize this as a legitimate factor other than sex to justify a wage disparity. The issue that has divided the federal Courts of Appeals is whether salary history by itself is enough to justify a disparity. Several recent decisions have addressed this issue. In Rizo v. Yovino , 277 an employee of Fresno County alleged that the county’s use of prior salary history to determine starting salaries was a violation of the federal EPA. 278 The county used a salary schedule to determine the starting salaries of management-level employees, which used prior salary to determine starting salaries. 279 The district court held that when a pay disparity was based exclusively on prior wages, it could not be based on a factor other than sex: “[A] pay structure based exclusively on prior wages is so inherently fraught with the risk—indeed, here, the virtual certainty—that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose.” 280 The district court recognized that its decision was potentially in conflict with prior Ninth Circuit precedent, Kouba v. Allstate Ins. Co. , which held that prior salary can qualify as a factor other than sex, provided that the employer shows that the prior salary effectuates some business policy and the employer uses prior salary reasonably in light of its stated purpose as well as its other practices. 281 On April 9, 2018, the Ninth Circuit, sitting en banc , reversed the panel decision and overruled Kouba , holding that “[r]eliance on past wages simply perpetuates the past pervasive discrimination that the Equal Pay Act seeks to eradicate. Therefore, we readily reach the conclusion that past salary may not be used as a factor in initial wage setting, alone or in conjunction with less invidious factors.” 282 According to the Ninth Circuit, a legitimate “factor other than sex” must be “job related,” which automatically excludes the use of prior salary: “[a]t the time of the passage of the Act, an employee's prior pay would have reflected a discriminatory marketplace that valued the equal work of one sex over the other. Congress simply could not have intended to allow employers to rely on these discriminatory wages as a justification for continuing to perpetuate wage differentials.” 283 However, on February 25, 2019, the Supreme Court reversed the en banc decision of the Ninth Circuit because the author of that decision, the Honorable Stephen Reinhardt, had died before the decision was filed and therefore could not be counted in the en banc majority. 284 Without Judge Reinhardt’s vote, the Ninth Circuit’s decision would have been approved by only five of the ten judges on the en banc panel. 285 277 Rizo v. Yovino , 854 F.3d 1161 (9th Cir. 2017), aff’d en banc , 887 F.3d 453 (9th Cir. Apr. 9, 2018), rev’d , 139 S.Ct. 706 (2019). 278 Id. at 1163. 279 Id. To determine the step on which a new employee would begin, the county considered the employee's most recent prior salary and placed the employee on the step that corresponds to his or her prior salary, increased by 5%. Id. Because the plaintiff’s prior salary was below the Level 1, Step 1 salary, even when increased by 5%, she was automatically started at the minimum salary level. Id. at 1164. 280 Rizo v. Yovino , No. 1:14-cv-0423-MJS, 2015 WL 9260587, at *9 (E.D. Cal. Dec. 18, 2015). 281 See Kouba v. Allstate Ins. Co. , 691 F.2d 873, 876-77 (9th Cir. 1982). 282 Rizo v. Yovino , 887 F. 3d at 468. A three-judge panel of the Ninth Circuit initially reversed, holding that its decision was controlled by Kouba . Because the district court had not evaluated whether the county’s use of prior salary effectuated a business policy, or whether its reasons for doing so were reasonable, the decision was vacated and remanded to the district court for further consideration. Rizo , 854 F.3d at 1167. However, the Ninth Circuit then announced that it would rehear the case en banc. Rizo v. Yovino , 869 F.3d 1004 (9th Cir. 2017). 283 Id. at 461. 284 Yovino v. Rizo , 139 S.Ct. 706 (2019). 285 Id. at 708. According to the Supreme Court, “it is generally understood that a judge may change his or her position up to the very moment when a decision is released,” and “a case or controversy is ‘determined’ when it is decided.” Id. (quoting U.S. v. American- Foreign S. S. Corp. , 363 U.S. 685, 688 (1960). Allowing Judge Reinhardt to cast a vote for a decision filed after his death would ”effectively allow[] a deceased judge to exercise the judicial power of the United States after his death,” a practice that would run afoul of the constitutional dictate that “federal judges are appointed for life, not for eternity.” Id.