Salaries Speak Louder than Words: Equal Pay Day 2021

Katherine M. Flett

By Katherine M. Flett

equal pay dayEqual Pay Day 2021 is March 24, symbolizing how far into the year women must work to earn what men earned in the previous year. Thankfully, this date is not static and falls earlier each year with this year falling 19 days earlier than just five years ago. While we celebrate this achievement, we have a long way to go to completely close the pay gap between men and women.

The Equal Pay Act has prohibited sex-based wage discrimination for over 50 years. Under the Act, an employer may justify wage disparities only based on one of four exceptions:

  • Seniority;
  • Merit;
  • Measurement of earnings by quantity or quality of production; or
  • A differential based on “any factor other than sex.”

The last “catch-all” exception was the focus of Rizo v. Yovino.Aileen Rizo, an experienced middle and high school math teacher, was hired as a math consultant by the Fresno County Office of Education (“Fresno”). The district’s salary determination policy for new hires was to add 5% to the employee’s previous salary and place them within the corresponding salary scale. Rizo sued Fresno for violating the Equal Pay Act, among other claims, after learning that her male coworkers were placed into higher salary scales upon hire than she was.

The trial court rejected Fresno’s argument that Rizo’s prior salary was a permissible “factor other than sex.” Fresno appealed to the Ninth Circuit which rejected their argument, holding that a “factor other than sex” must be “job-related” and not one that affects a “business policy.”  The court specifically noted that “to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act and would vitiate the very purpose for which the Act stands.”  Instead, the court held the “any factor other than sex” exception must be “limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.”

This decision contrasted directly with the Seventh and Eighth Circuit, which had held that prior pay could be considered to establish starting salary. The decision more closely aligned with the Tenth and Eleventh Circuit, which found that prior pay alone could not be considered when establishing a starting salary.

Fresno appealed to the U.S. Supreme Court. Instead of resolving the circuit split once and for all, the Supreme Court vacated and remanded the decision on a technicality: Judge Reinhardt, author of the Ninth Circuit’s majority opinion, died 11 days before the decision was officially published. The Supreme Court determined that it was improper to count Justice Reinhardt’s vote because judges may change their votes up until the date the decision is released to the public. Because the other five judges wrote only  concurrences for various reasons, the Court found it impossible to determine what the outcome would have been without Judge Reinhardt as the majority opinion. Thus, the Court found the only feasible solution to vacate and remand the Ninth Circuit decision.

On remand in February 2020, the Ninth Circuit affirmed and held that Fresno’s standard procedure for setting employee’s starting salary, which started with employee’s prior wages, was not a “factor other than sex” that could defeat a prima facie case of a violation under the Equal Pay Act.  Two separate concurring opinions agreed with the result but criticized the majority opinion for:

  • Interpreting the Equal Pay Act’s “catch all” defense too narrowly, and
  • For embracing a position that puts the Ninth Circuit at odds with other circuits and guidance from the U.S. Equal Employment Opportunity Commission, which provided that an employer may consider prior salary as part of a mix of factors.

In July 2020, the Supreme Court denied Fresno’s petition to review the decision.

As such, the circuit courts are still split on this issue. In contrast to the Ninth Circuit (which includes Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), the Eighth Circuit (which includes Arkansas, Iowa, Minnesota, Missouri, Nebraska, and South Dakota) allows employers to rely on prior salary in setting pay as long as the prior salary was based on a factor other than sex.  See Drum v. Leeson Elec. Corp., 565 F.3d 1071, 1073 (8th Cir. 2009).

With the wide variability of interpretation of the federal Equal Pay Act across the country, some states, including Illinois, have enacted strong equal pay laws making it more difficult to justify disparities in pay between men and women. While the Missouri Equal Pay Act does not directly address the issue, Kansas City passed an ordinance prohibiting employers from asking job applicants about their salary history.  See Ordinance No. 190380.

While these changes in laws are definitely a step in the right direction, we still have a long way to go to completely close the gender wage gap.  Because after all, salaries speak louder than words.

Posted by Attorney Katherine M. Flett. Flett is a member of the litigation team whose primary focus is on assisting clients in insurance defense, business litigation, employment law, and bankruptcy matters.

Published in the March 2021 St. Louis Small Business Monthly.

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