Employers in the Ninth Circuit had long been permitted to use salary history to determine employee wages. But in the spring of 2018, the Ninth Circuit Court of Appeals said no more. In Rizo v. Yovino, the court held that prior salary does not justify sex-based wage differentials under the Equal Employment Act (EPA).
Enacted in 1963 as an amendment to the Fair Labor Standards Act, the EPA prohibits sex-based wage discrimination between men and women employed in the same establishment who perform jobs that require equal skill, effort and responsibility. The EPA, thus, stands for the basic principle that men and women should be paid the same for doing the same work. This mandate, however, is not without qualification. The EPA carves out four exceptions; specifically, wage differentials are permitted if effectuated pursuant to “(i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex[.]” The Rizo court ruled that prior salary does not constitute a “factor other than sex” under this fourth exception— colloquially referred to as the ‘catch-all clause.’