Rizo v. Yovino, Ninth Cir., 04/27/17
Aileen Rizo, employee of Fresno County public schools, filed a lawsuit against Fresno County Superintendent of Schools after discovering that she was getting paid a lower salary than her male co-workers for the same work. Rizo claimed that this disparity in pay was in violation of the Equal Pay Act, Title VII of the Civil Rights Act of 1964, and the California Fair Employment and Housing Act, Cal. Gov. Code § 12940. Despite the County’s concession that it paid Rizo less than comparable male employees for the same work, the County moved for summary judgment arguing that a pay differential “based on any other factor other than sex” is an affirmative defense to a claim under the Equal Pay Act. In this case, that “other factor” was recent prior salary, supported by the various reasons why the County considered prior salary. The district court rejected the County’s argument and denied summary judgment. Held: Vacated and Remanded.
Rizo was hired by the County as a math consultant. The County uses a multi-level salary structure – with many levels and with many steps in each level. As with other employees, Plaintiff’s salary was set at the level that corresponded to her prior salary. Rizo had lived and worked in Arizona and was making about $50k/year. Therefore, her prior salary was way below the lowest step of the first level, and so her salary was set at the bottom rung (about $62k). County policy required that new employees be paid at least 5% more than their prior salary. All of Rizo’s male counterparts received a higher salary, presumably because their past salaries were higher. The County had various reasons for its system – it removed bias and created consistency; the 5% increase over past salary helped lure employees to the County; and, it saved tax dollars.
The district court refused to consider the County’s justifications and instead determined that, under the Equal Pay Act, prior salary alone can never qualify as “a factor other than sex,” reasoning that “a pay structure based exclusively on prior wages is so inherently fraught with the risk . . . that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate nondiscriminatory business purpose.” The court therefore denied the County’s motion for summary judgment.
Its conclusion didn’t square with the Ninth Circuit’s decision in Kouba v. Allstate Insurance Co. In Kouba, the appeals court said that an employee’s prior salary can be considered “a factor other than sex” under the federal Equal Pay Act if the employer can show that doing so “effectuate[s] some business policy” and is done “reasonably in light of [its] state purpose as well as its other practices.” However, the district court refused to consider the County’s business reasons. The Ninth Cir. noted that “[w]e do not see how the employer’s consideration of other factors would prevent the perpetuation of existing pay disparities if, as we assumed in Kouba and as is the allegation here, prior salary is the only factor that causes the current disparity.” The Ninth Circuit therefore vacated the district court’s order and remanded to the court to consider the justifications of the County.
My view – This case shows how facile it is to simply presume that prior salary can never qualify as a factor other than sex, or that prior salary only perpetuates prior sex discrimination. The County’s system itself had nothing to do with sex, and applied equally to men and women. Moreover, the disparity was likely based on the fact that Ms. Rizo lived and worked in Arizona. (Google this query: What is the cost of living differences between Arizona and California . . . .)
A few notes of interest:
• Under federal law, Equal Pay Act creates a form of strict liability. The burden is on the claimant, who makes a prima facie case by showing he/she is receiving different wages for equal work. The burden of persuasion then shifts to the employer to justify the disparity in one of four statutory exceptions: seniority, merit, quantity/quality of production or a differential based on any other factors other than sex.
• In Kouba, the court found that the Equal Pay Act does not impose a strict ban on the consideration of prior salary; at the same time, past salary does not automatically qualify as a factor other than sex.
• Other jurisdictions have held that the prior salary alone cannot justify pay disparities between the sexes.
• Effective January 1, 2017, California passed AB 1676 which amended Section 1197.5 of the Labor Code to explicitly prohibit an employer from justifying an otherwise unlawful difference in pay on an employee’s or applicant’s prior salary alone. California employers may still use prior salary as one “bona fide factor other than sex” justifying a gender, race, or ethnicity wage disparity, so long as, the pay gap is also based on at least one other reasonable factor, such as education, training or experience.