SAN FRANCISCO (CN) – The en banc Ninth Circuit gave little indication Tuesday as to whether an employer can base an employee's starting salary on salary history alone, a practice critics say perpetuates pay inequity between women and men.
The court's 11 judges alternately supported and demolished both parties in the Equal Pay Act case, ultimately focusing on how a ruling could change the circuit's case law as set forth in 1982's Kouba v. Allstate Ins. Co.
But about half the panel agreed basing salary on prior pay is discriminatory because women have historically been paid less than men for the same job, perhaps presaging its decision.
"The basic purpose of the statute is to correct pay imbalances in the market based on gender," Circuit Judge William Fletcher said of the Equal Pay Act. "And it seems to me counterintuitive, and even contrary, almost obviously contrary, to the function of the statute if you are allowed to feed back into pay setting the very set of pay differentials the statute is designed to correct."
Aileen Rizo, a math consultant, sued the Fresno, California, school district in 2014 under the Equal Pay Act, which requires employers to pay women and men the same wages for the same job. She claimed the district was paying her thousands of dollars less than her three male colleagues to instruct the county's math teachers despite having more experience.
The school district moved for summary judgment, denying gender discrimination was the reason it paid Rizo less. An employer is exempt from Equal Pay Act lawsuits if it shows that a difference in pay is due to one of four exceptions. The school district relied on the law's fourth exception to argue that the wage disparity between Rizo and her male colleagues stemmed from a "factor other than sex”: its pay structure.
The pay structure, implemented in 2004, bases an incoming employee's salary solely on salary history. Management-level employees like Rizo get a 5 percent increase from their previous salary and a bonus for a master's degree. Rizo earned $62,133, the minimum starting salary for a management-level Fresno educator.
Rizo countered that because women are paid less than men for the same job, salary history is not a "factor other than sex," and using it to set pay is illegal.
In 2015, U.S. Magistrate Judge Michael Seng denied Fresno’s motion. Noting the Bureau of Labor Statistics found female teachers are paid less than their male counterparts, he held Fresno's pay structure "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."
According to the Bureau of Labor Statistics, female middle school teachers in 2016 made 87 cents for every dollar male middle school teachers made. Female high school teachers made just under 94 cents for every dollar paid to male high school teachers that year.
Citing Kouba, Fresno told Seng the Ninth Circuit had already decided the Equal Pay Act allows an employer to consider prior salary in setting starting pay.
