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Employers May Not Consider Prospective Employees’ Former Salaries When Setting Wage Differentials

Employers May Not Consider Prospective Employees’ Former Salaries When Setting Wage Differentials

April 11, 2018 by Mark H. Wagner

In Rizo v. Yovino, the 9th Circuit considered the text of the Equal Pay Act, 29 U.S.C. Section 206(d)(1). The relevant section states that employers may not discriminate against employees on the basis of sex by paying men and women different wage rates except where such payments are made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any other factor other than sex. Here, the Court held that a prospective employee’s prior salary alone, or in a combination with other factors, cannot be considered a “factor other than sex” upon which a wage differential can be based. Furthermore, the Court clarified that “any other factor other than sex” is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. The Court reasoned that allowing employers to consider prior employee salaries would perpetuate the discriminatory wage disparity between men and women that lamentably still exists in the modern workplace, which would defeat the very purpose of the Equal Pay Act. Therefore, the Court affirmed the lower court’s denial of summary judgment to defendant employer.

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