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Legally Speaking: Employers can’t justify wages based on prior salaries

(AP Photo/Haven Daley)

If you are an employer in Arizona you should make it a habit, better yet, a rule, to no longer ask about an applicant’s salary history.

According to the 9th Circuit Court of Appeals in the recent case of Rizo v. Yovino, under the federal Equal Pay Act, an employer cannot justify a wage difference between male and female employees by relying on prior salary.

Since Arizona is in the 9th Circuit a plaintiff could use the ruling to win a lawsuit in our state.

The 9th Circuit Court of Appeals explained: “[T]he question before us is also simple: Can an employer justify a wage differential between male and female employees by relying on prior salary? The answer is no.

We took this case en banc in order to clarify the law, and we now hold that prior salary alone or in combination with other factors cannot justify a wage differential.”

The federal Equal Pay Act, referenced by the court, has been around since 1963 and states men and women should receive equal pay for equal work regardless of sex.

According to the court, “Congress enacted the Equal Pay Act in 1963 to put an end to the ‘serious and endemic problem of employment discrimination in private industry’ and to carry out a broad mandate of equal pay for equal work regardless of sex.”

It further explained “the Equal Pay Act ‘creates a type of strict liability’ for employers who pay men and women different wages for the same work: Once a plaintiff demonstrates a wage disparity, she is not required to prove discriminatory intent.

Even though that has been the law for more than 50 years, there have been many debates, discussions and lawsuits over whether men and women are paid equally or should be.

You have likely heard something akin to white women make 80 percent of what a white man makes, while minority women make even less than that. You can argue over whether that is true or not, but that is not the point of this post.

The court explained that allowing prior salary to justify the pay difference between a man and a woman could support any sexual discrimination that has happened in the past in connection with that salary.

Let me explain: Take a situation where a female applicant interviews for a job and discloses she makes $30,000 a year at her current job. The employer then uses that to justify paying her $32,000 a year when a male employee, in the same or similar position, is making $40,000 a year.

The 9th Circuit Court of Appeals held that would violate the Equal Pay Act because her salary is below the salary of her male colleague and using that prior salary amount would support the persistence of the wage gap that could have been created based on sexual discrimination.

In other words, her previous salary could be a result of gender discrimination and to use that number to justify her new salary when a male colleague is making more would just further support and encourage the discrimination that may have happened in the first place.

At this point in the discussion some of you may argue that employers should be allowed to take previous salary history into account as long as it is not the only factor. The court addressed that and held that prior salary alone or in combination with other factors cannot justify a wage differential.

Employers should not get discouraged because according to the court employers can still use 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.

That means that employers can still base salary amounts on “legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.”

Bottom line, when it comes to determining salary, whether the lone factor is salary history or it is one of many factors, using previous salary history violates the Equal Pay Act.

As such, job applicants should not volunteer the information and employers should not ask for the information.

Even if a job applicant volunteers their salary history, using it could be a basis for a lawsuit. Employers should instead base their offer on those systems listed above that do not violate the law.

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