This post was authored by Megan Lewis.

Just one day before Equal Pay Day, April 10, 2018, the Ninth Circuit in Rizo v. Yovino ruled that an employer cannot perpetuate a gender pay gap by paying a female employee less than a male employee for the same work, simply because the female employee made less money in a prior position. The Ninth Circuit’s decision reversed its prior precedent and changed the law in a way designed to expedite elimination of pay gaps.

Last year, the Ninth Circuit Court of Appeal held that employers may rely on an applicant’s prior salary history in setting employees’ rates of pay. Aileen Rizo, a math consultant with the Fresno County public schools, sued the County under the federal Equal Pay Act (“EPA”) and other laws after discovering the County paid her male colleagues more for the same work. The District conceded that she received lower wages than male employees for equal work, but claimed the differential was permissible under the EPA because it was based on “a factor other than sex,” namely her prior salary. The District Court rejected the County’s argument, and the Court of Appeal reversed, holding the employer could rely on prior pay to justify a lower salary.

The Ninth Circuit subsequently granted a petition for en banc review of the decision and, on April 9, 2018, reversed its prior decision (and thereby overruled a thirty year old precedent). You can read the text of the new decision in full here.

The key takeaway from the new ruling is that salary history is not a “factor other than sex” for purposes of the Equal Pay Act, meaning 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.  As Judge Reinhardt wrote for the court:

“We conclude, unhesitatingly, that ‘any other factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing ‘endemic’ sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities—disparities that Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.”

In sum, because “[r]eliance on past wages simply perpetuates the past pervasive discrimination that the Equal Pay Act seeks to eradicate[,]” the court ruled that “past salary may not be used as a factor in initial wage setting, alone or in conjunction with less invidious factors.”

This ruling is consistent with legislative trends around the country. California recently passed AB 168, which restricts the ability of employers to gather applicants’ salary history information or consider such information when determining whether to offer employment to an applicant and/or what salary to offer.  You can read our blog post about AB 168 here.  Other states, including Massachusetts, Delaware, and Oregon have passed similar legislation, as have cities like New York, San Francisco, Boston, and Philadelphia.

Though the gender gap persists, this ruling is another step towards eradicating systemic discrimination against women in the workplace.