Developments In Equal Pay Litigation - 2022 Update

36 | Developments in Equal Pay Litigation © 2022 Seyfarth Shaw LLP On February 27, 2020, the Ninth Circuit, sitting en banc , issued another decision holding—again—that prior salary cannot be used as the sole “factor other than sex” to justify pay differences under the federal EPA. 286 The new decision echoed Judge Reinhardt’s April 2018 opinion, holding that past salary is not a “factor other than sex” and reviving plaintiff’s suit under the EPA. Writing for the majority, Judge Morgan Christen wrote that “setting wages based on prior pay risks perpetuating the history of sex-based wage discrimination.” 287 She also wrote: “[t]he express purpose of the act was to eradicate the practice of paying women less simply because they are women. Allowing employers to escape liability by relying on employees’ prior pay would defeat the purpose of the act and perpetuate the very discrimination the EPA aims to eliminate.” 288 The Ninth Circuit’s decision in Rizo v. Yovino adds to a growing split among the Courts of Appeals on this issue. For example, the Seventh Circuit came to an arguably different conclusion in Lauderdale v. Illinois Department of Human Services . 289 The Seventh Circuit’s prior decisions had consistently held that a difference in pay based on the difference in what employees were previously paid is a legitimate factor other than sex under the EPA. 290 Relying on that precedent, the Seventh Circuit held that a pay discrepancy that was created in reliance on prior salaries is not a violation of the EPA unless sex discrimination led to the lower prior wages. 291 The Eighth Circuit has also followed this line of reasoning. 292 Other Circuits have held differently. For example, in Irby v. Bittick , 293 the Eleventh Circuit held that “[w]hile an employer may not overcome the burden of proof on the affirmative defense of relying on ‘any other factor other than sex’ by resting on prior pay alone, as the district court correctly found, there is no prohibition on utilizing prior pay as part of a mixed-motive, such as prior pay and more experience.” 294 The Tenth Circuit has also held that prior salary cannot stand alone as a defense to an EPA claim. In Angove v. Williams-Sonoma, Inc. , 295 a male retail employee argued that the district court had 286 Rizo v. Yovino , 950 F.3d 1217 (9th Cir. 2020). 287 Id. at 1228. 288 Id. at 1219. In concurring opinions, two judges said their colleagues should have taken the more moderate approach of some other circuits. Judge Margaret McKeown said the policy did not justify the disparity between plaintiff’s pay and that of her male coworkers, but salary history “may provide a lawful benchmark” for setting pay if considered alongside other factors such as education and training. Id. at 1234. Judge Consuelo Callahan also concurred, joined by Judges Tallman and Carlos Bea. She stated that an employer should be permitted to use past salary as a factor in setting pay, as long as its use “does not reflect, perpetuate, or in any way encourage gender discrimination.” Id. at 1241. 289 Lauderdale v. Ill. Dep’t of Human Servs. , 876 F.3d 904 (7th Cir. 2017). In this case, the Seventh Circuit held that the Illinois pay plan for state employees did not violate the EPA by basing pay increases, at least in part, on an employee’s prior salary. The Department had conceded that plaintiff had established a prima facie case under the EPA because she had taken over the same responsibilities as her predecessor but was paid less. Id. at 907-08. She was therefore paid less for work that was equal to, if not more demanding than, the work performed by her male predecessor. However, the Department argued that the pay discrepancy was based on non-discriminatory bases, including the employees’ prior salaries. Id. at 908-09. 290 Id. at 908 (citing Wernsing v. Dep't of Human Servs. , 427 F.3d 466, 468 (7th Cir. 2005); Dey v. Colt Constr. & Dev't Co. , 28 F.3d 1446 (7th Cir. 1994); Riordan v. Kempiners , 831 F.2d 690 (7th Cir. 1987), and Covington v. S. Ill. Univ ., 816 F.2d 317 (7th Cir. 1987)). 291 Id. at 909. Given the salary history, as well as some budget concerns that also impacted the pay decision, the court held that no reasonable juror could find that plaintiff was paid less because of her sex, and upheld the grant of summary judgment to the Department. Id. 292 See Taylor v. White , 321 F.3d 710 (8th Cir. 2003). In Taylor , a female civilian employee of the Army alleged that her pay at a lower pay grade than her male peers was a violation of the EPA. Id. at 713. The Army sought summary judgment, arguing that the pay disparity was the result of its non-statutory salary retention policy that was intended to retain skilled workers and protect workers’ salaries. Id. at 716. The employee argued that, as a matter of law, an employer should not be allowed to rely on prior salary or a salary retention policy as a defense under the EPA because those factors would permit the perpetuation of unequal pay structures. Id. The Eighth Circuit examined the Circuit split and, in particular, adopted the reasoning of the Ninth and Seventh Circuits in Kouba and Covington over that of the Eleventh Circuit. Id. at 718-19. The Eighth Circuit concluded: “we believe a case-by case analysis of reliance on prior salary or salary retention policies with careful attention to alleged gender-based practices preserves the business freedoms Congress intended to protect when it adopted the catch-all ‘factor other than sex’ affirmative defense. To conduct a reasonableness inquiry into the actions of the employer or to limit the application of a salary retention policy to only exigent circumstances would, we believe, unnecessarily narrow the meaning of the phrase ‘factor other than sex.’” Id. at 720. 293 Irby v. Bittick , 44 F.3d 949 (11th Cir. 1995). 294 Id. at 955 (citing Glenn v. Gen. Motors Corp ., 841 F.2d 1567, 1571 n.9 (11th Cir. 1988)). 295 Angove v. Williams-Sonoma, Inc. , 70 F. App’x 500 (10th Cir. 2003).