By Anthony J. Oncidi and Nayirie Kuyumjian

 

 

 

 

 

On Monday, the Ninth Circuit issued a significant opinion, Rizo v. Yovino, 2018 WL 1702982 (9th Cir. April 9, 2018), authored by the late “liberal lion” Judge Stephen Reinhardt, holding that an employer’s consideration of prior salary information cannot serve as a justification for sex-based wage differentials under the federal Equal Pay Act.

The lawsuit was brought by Aileen Rizo, a California math consultant who alleged that the Fresno County Superintendent of Schools violated the Equal Pay Act by improperly setting the salary of employees based on adding 5% to new hires’ prior salary. In its 52-page decision, the Court focused on the catchall exception to wage differentials under the Equal Pay Act—“a differential based on any other factor other than sex.”  Through interpreting the statutory text and legislative history of the Act, the Court concluded that prior salary does not fall under the catchall exception by emphasizing that the exception only applies to legitimate job-related factors (e.g., experience, educational background, ability, prior job performance) and does not apply to factors “that are simply good for business.”

The Court explained that prior salary “is not a legitimate measure of work experience, ability, performance, or any other job-related quality” and that it had an attenuated relationship with “legitimate factors other than sex such as training, education, ability, or experience.” The opinion rejects a 2017 decision of a three-judge panel of the Ninth Circuit in the same case and overrules Kouba v. Allstate Ins. Co., 691 F.2d 873 (9th Cir. 1982), in which the Court had found that past salary information is a factor employers could consider in setting a salary structure.  In their concurrence, Judges Callahan and Tallman stated that the majority “unnecessarily ignores the realities of business and, in doing so, may hinder rather than promote equal pay for equal work.”

The Ninth Circuit issued the Rizo decision less than two weeks after the California Superior Court in San Francisco refused to dismiss a putative class action, Kelly Ellis et al. v. Google, LLC, Case No. CGC-17-561299 (Mar. 27, 2018), in which former female employees of Google claim that the company does not compensate women as highly as men in violation of the California Equal Pay Act.  The Complaint alleges that Google has a policy of connecting women’s pay to their past salary and places and keeps women in lower paying job positions.

These rulings come at a time when states across the nation are enacting new laws to bolster pay equity protections for employees consistent with California’s Equal Pay Act.   That law already prohibits employers from relying on information regarding past pay to justify sex-based pay difference.  Cal. Lab. Code § 1197.5(b)(3) (“Prior salary shall not, by itself, justify any disparity in compensation”).  California also recently enacted a statewide salary history inquiry law  prohibiting employers from asking applicants about salary history information. Cal. Lab. Code § 432.3.

In light of the increasing focus on pay equity as it relates to prior salary history, employers should take immediate steps to address pay equity issues in the workplace, including conducting internal audits (preferably with the assistance of counsel so that the attorney-client privilege may be invoked) and analyzing pay practices and policies with a focus on specific categories of positions and job levels.

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the Co-Chair Emeritus of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law…

Anthony J. Oncidi is the Co-Chair Emeritus of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.