This post was authored by Megan Lewis.
The United States Supreme Court has vacated the decision of Ninth Circuit U.S. Court of Appeals (which covers all of California) in Rizo v. Yovino, which established that employers cannot rely on an applicant’s prior salary history to justify paying one employee differently than another employee of the opposite sex for similar work.
The Ninth Circuit’s Decision
The key issue in Rizo was the meaning of an exception to the federal Equal Pay Act. This Act requires that, where an employer is paying an employee less than an employee of the opposite sex for work requiring the same skill, effort, and responsibility, which is performed under similar working conditions, the employer must be able to demonstrate that the disparity is based on one of the following: (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) a differential based on any other factor other than sex. The first three exceptions are fairly straightforward, but the fourth (known as the “catchall” exception) has often been the subject of litigation, as it was in the Rizo case.
The Ninth Circuit held that the only “factor[s] other than sex” employers can use to justify a wage disparity are “legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. The Ninth Circuit stated that allowing salaries that were the result of “endemic sex-based wage disparities” to play a role in future salaries would, “perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.”
The U.S. Supreme Court’s Decision to Vacate
When we last reported on this decision, a petition for writ of certiorari was pending asking the high court to review the matter. Jim Yovino, the Fresno County Superintendent of Schools, had asked the Court to review the Ninth Circuit’s decision because the U.S. Courts of Appeal in other parts of the Country had issued diverse opinions on whether prior salary is a “factor other than sex.”
The Court granted certiorari, but did not reach the merits of the Ninth’s Circuit’s ruling. Instead, the Court vacated the decision and returned the case to the Ninth Circuit because Judge Stephen Reinhardt, who had authored the majority decision, died before the decision was issued. Though the Ninth Circuit’s opinion noted that the judges voted and completed their opinions before Judge Reinhardt died, the Supreme Court set aside the ruling. According to the Court, “federal judges are appointed for life, not for eternity.”
What Happens Next?
The Ninth Circuit was unanimous in ruling in favor of Rizo, and that outcome is unlikely to change when a new ruling is issued. However, the panel was split on the reasoning behind the ruling, so we could see a different rationale behind the decision when the Ninth Circuit issues its new ruling with another judge taking Reinhardt’s place
As a practical matter, this ruling does not impact California employers because there is California law (Labor Code § 432.3) that already restricts the ability of employers to gather applicant salary history information or consider such information when determining whether to offer employment to an applicant and/or what salary to offer.
We will provide an update when the Ninth Circuit issues its new ruling.