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EMPLOYERS CANNOT RELY ON AN EMPLOYEE'S PRIOR PAY IN SETTING INITIAL SALARY ACCORDING TO AN EN BANC PANEL OF THE NINTH CIRCUIT COURT OF APPEALS

By: Michael G. Woods

Tuesday, April 17, 2018

On April 9, 2018, an En Banc panel of 11 judges in the United States Court of Appeals for the Ninth Circuit Court unanimously held that “prior salary alone or in combination with other factors cannot justify a wage differential” between men and women.  Rizo v. Yovino, No. 16-15372. The court determined that prior pay was not a “factor other than sex” under the Equal Pay Act, 29 U.S.C. §206(d)(1), which could justify a differential in pay, overruling a three-judge appellate panel which unanimously held otherwise, relying on Kouba v. Allstate Insurance Co. 691 F.2d 873 (9th Cir. 1982).  The En Banc decision expressly overruled Kouba which held the Equal Pay Act does not impose a strict prohibition against the use of prior pay in determining an employee’s starting salary.

The ruling by the En Banc panel is at odds with rulings in other circuits but is now the law in the Ninth Circuit.  Consequently, in California and the remainder of the Ninth Circuit, an employer may not rely at all on prior salary in determining starting pay under the federal Equal Pay Act.  California state law is a little different.  Under California’s Equal Pay Act, which was amended effective January 1, 2016, an employer may not rely solely on the employee's prior salary to justify any pay differential.  And effective January 1, 2018, California law prohibits an employer from inquiring about an applicant's prior salary.  The court's ruling and the amendments to California law are designed to benefit women and to carry out a broad mandate of equal pay for equal work.

Last Updated Tuesday, September 25, 2018 - 02:10 AM.