It took Aileen Rizo six years to get her Equal Pay Day.
On Monday, an 11-judge panel for the Ninth Circuit Court of Appeals ruled that employers can’t use a woman’s salary history to rationalize paying her less than a man doing the same job.
The appeals court reviewed and overturned a ruling made last year by three appellate judges, who had sided with a lower court in deciding that it wasn’t a form of gender discrimination for the Fresno school district to pay a female math consultant less than a male peer. The lower court had ruled in Rizo v. Yovino that the school district’s decision to pay Aileen Rizo less was based on the fact that she was paid less in previous jobs, not because she was a woman.
But a panel of judges said that calculating a woman’s pay based on her salary history is a form of gender discrimination — a violation of the Equal Pay Act of 1963, which prohibits businesses from paying women less than men for the same work.
“Although the Act has prohibited sex-based wage discrimination for more than fifty years, the financial exploitation of working women embodied by the gender pay gap continues to be an embarrassing reality of our economy,” wrote US Circuit Judge Stephen Reinhardt in the court’s majority opinion. (It was one of Reinhardt’s last rulings before he died last month of a heart attack.)
Reinhardt argued that the persistent gender pay gap — with women now earning on average 80 cents for every dollar a man earns — is a form of gender discrimination, so basing a woman’s salary on past earnings was also a form of discrimination.
The ruling marks a major shift in how the Ninth Circuit has interpreted the Equal Pay Act, and affects workers who live in the nine Western states in the Ninth Circuit. And Reinhardt’s opinion goes even further than the rulings of the 10th and 11th Circuits, which only bar businesses from using salary history as the sole reason for paying a woman less. Reinhardt, who was known as a “liberal lion” in the country’s most liberal appellate court, said that it should never be used as a factor in paying a woman less.
“To hold otherwise — 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,” he wrote.
Public opinion has shifted on the issue
Monday’s ruling reflects a shift taking place across the country. Renewed attention to the gender wage gap and research on the role of a woman’s salary history in perpetuating it has led women’s rights advocates to push lawmakers to ban employers from asking job candidates about their salary history.
In recent years, they’ve won several victories. Several states, such as Massachusetts, Delaware, and Oregon, have banned the practice. In 2017, California did too. Cities such as New York, San Francisco, Boston, Philadelphia, Pittsburgh, and New Orleans have done the same.
Congress has not passed such a law, and the Ninth Circuit’s decision doesn’t go that far, but it could still have far-reaching consequences. The ruling makes it a lot harder for employers in the region — which includes Silicon Valley — to persuade a federal judge to dismiss gender pay discrimination lawsuits.
That’s because federal judges in the Ninth Circuit now need to reinterpret the Equal Pay Act. The law bars businesses from paying men and women different wages, but there are exceptions: A man could be paid more because of seniority, experience, or work performance. The law also says employers could pay different wages if the decision was “based on any other factor than sex.”
That last exception is at the heart of the recent legal battle. For more than three decades, the Ninth Circuit has viewed salary history as a factor “other than sex,” and therefore held that it was not illegal for businesses to pay a woman less than a man just because she earned less in previous jobs. That view has been the norm since the court’s 1982 ruling in Kouba v. Allstate Insurance Company.
In that case, an Allstate agent in Sacramento and her female colleagues sued the company for allegedly discriminating against women by basing their wages on their last salary. Lola Kouba claimed she was paid about $800 a month compared to $1,000 a month earned by male colleagues doing the same job.
But the Ninth Circuit disagreed with Kouba’s discrimination argument, saying it was not illegal to pay a woman less than a man based on her past salary if the employer had “an acceptable business reason” to do so. Allstate argued that it did so to save money; the appellate court considered that a legitimate business decision.
The ruling — like all appellate court rulings — created a binding precedent for all federal judges in the nine states covered by the Ninth Circuit, requiring them to rule the same way in similar cases for decades.
As of Monday, that has changed.
A math teacher successfully challenged the court’s view
The appellate court’s recent ruling stems from a gender discrimination lawsuit filed in 2012. In Rizo v. Yovino, Aileen Rizo, a math consultant in Fresno, California, said the school district discriminated against her by using her salary history to justify paying her less than her male colleagues.
When Fresno County hired Rizo in 2009, it used a standard pay schedule, which included 10 salary levels for math consultants. To calculate the pay level for a new hire, the Fresno school district took the candidate’s most recent salary, added 5 percent, and placed the new hire at the corresponding pay level within the salary schedule.
Before taking the job in Fresno, Rizo earned $50,630 a year as a middle school math teacher in Arizona. Even with a 5 percent bump, that placed her at the bottom of Fresno County’s pay schedule.
Lawyers representing the school district conceded that the country paid Rizo less than male employees for the same work. But they argued that the county did not violate the Equal Pay Act because the basis for the pay disparity — the county’s salary schedule — was a “factor other than sex” that exempted the county from liability.
The district court disagreed with the county’s defense and ruled in favor of Rizo. Here was its reasoning:
A pay structure based exclusively on prior wages 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.
The county appealed the decision, and in April 2017, a three-judge panel of the Ninth Circuit reversed the lower court’s ruling. Their reasoning: The district court disregarded precedent from Kouba v. Allstate Insurance Company, which held that salary history is a factor other than sex.
Rizo petitioned the Ninth Circuit to review the April 2017 decision. A majority of Ninth Circuit judges then ordered an 11-judge en banc panel to rehear the case.
The decision published Monday sided with Rizo.