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Court: Prior Salary Can't Justify Lower Pay for Women

By William Vogeler, Esq. | Last updated on

A federal appeals court ruled that employers may not pay women less than men based on prior salaries when hiring for the same job.

The decision was a turnaround for the U.S. Ninth Circuit Court of Appeals, which last year ruled that employers could consider salary history in hiring. But the full court stepped over that decision by a three-judge panel, and also reversed its own ruling in a related case more than 35 years ago.

It is a significant opinion, in part because it was penned by Judge Stephen Reinhardt before he died last month. The "liberal lion" spared no one in thrashing a history of unequal pay for women.

Unequal Pay

In Rizo v. Yovino, the Ninth Circuit sought to undo decades of decisions allowing employers to get around wage disparities under a catchall exception of the Equal Pay Act. That, Reinhard said, has to stop.

"Although the Act has prohibited sex-based wage discrimination for more than fifty years, the financial exploitation of working women embodied by the gender pay gap continues to be an embarrassing reality of our economy," he wrote for the en banc panel.

Citing statistics from the National Partnership for Women & Families, Reinhardt said the wage gap costs women in the United States more than $840 billion a year. "If money talks," he said, it tells women that they are "not worth as much as men."

"Allowing an employer to justify a wage differential between men and women on the basis of prior salary is wholly inconsistent with the provisions of the Equal Pay Act," he wrote.

Overruling Precedent

The court's decision in Kouba v. Allstate Insurance Company was the part of the problem, the Ninth Circuit acknowledged. In that case, the appeals court said the Act does not "impose a strict prohibition against the use of prior salary."

"Prior salary is not job related and it perpetuates the very gender-based assumptions about the value of work that the Equal Pay Act was designed to end," the judicial panel said in overruling Kouba.

In Rizo, the unanimous court ruled in favor of a Fresno math consultant whosued because she was paid less than men for the same work. The school admitted that it paid her less, but said it was due to her salary history and not gender discrimination.

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