In a rare employer-friendly decision out of the U.S. Court of Appeals for the Ninth Circuit, the court has ruled that prior salary alone can serve as an “any other factor other than sex” affirmative defense to an Equal Pay Act (EPA) claim, as long as the use of prior salary was reasonable and effectuated a business policy.
Although the employer in Rizo v. Yovino, No. 16-15372 (April 27, 2017), conceded that it paid the plaintiff less than comparable male employees for the same work, it argued that it was lawful to do so because the disparity was the result of a standardized system that determined starting pay based on prior salary, a valid “any other factor other than sex” under the EPA.
In reversing a lower court ruling for the plaintiff, a three-judge panel concluded that longstanding Ninth Circuit precedent allows an employer, under certain circumstances, to defend against EPA pay disparity claims based on prior salary alone. The ruling reaffirms a circuit court split on the issue with the Ninth Circuit joined on one side by the Seventh and Eighth Circuits, and the Tenth and Eleventh Circuits on the other side both ruling previously that prior salary alone cannot justify a pay disparity under the EPA.
The Rizo case serves as a good reminder to employers about the application of the “any other factor other than sex” affirmative defense in an EPA case, especially when prior salary is used to determine employee compensation, and explains in part why pay equity advocates are aggressively pushing for laws that bar employers from asking applicants about salary history as part of the hiring process.
A copy of the court’s decision in Rizo v. Yovino is available here.
Members of the Equal Employment Advisory Council (EEAC) can read more here.