The Ninth Circuit Court of Appeals issued an opinion on April 9, 2018, that is likely to impact how courts nationwide evaluate pay discrimination claims. In Rizo v. Fresno County Office of Education, the Ninth Circuit held that the employer’s reliance on the plaintiff’s salary history was no excuse for paying her less than her male colleague.

Ms. Rizo worked as a math consultant for the Fresno County Office of Education (FCOE) in California. When a new employee, a man, joined FCOE to do similar work, Ms. Rizo discovered that his starting salary was significantly more than hers, even though she had more experience and seniority. In response to Ms. Rizo’s internal complaint, the FCOE explained that it based new employees’ salaries on their salary history. Because the man had been paid more at his previous job than Ms. Rizo had at hers, the FCOE paid him more.

Ms. Rizo filed suit under the Equal Pay Act, which is an amendment to the Fair Labor Standards Act, as well as a California law, alleging that the discrepancy between her and her male colleague’s salaries was sex discrimination. The Equal Pay Act requires that employers pay men and women equal pay for equal work, unless the pay differential is justified by a seniority system, merit system, a system which measures earnings by quantity or quality of production, or a “differential based on any factor other than sex.” The FCOE argued that its use of salary history was a “factor other than sex” and therefore not discrimination under the Equal Pay Act.

A three-judge panel of the Ninth Circuit agreed with the FCOE, but on rehearing the full Ninth Circuit held that using salary history, either alone or with other factors, cannot justify a wage differential. Salary history is not a “factor other than sex” under the Equal Pay Act. A “factor other than sex” must be a legitimate, job-related factor such as the employee’s experience, educational background, ability, or prior job performance. The Ninth Circuit held that an employee’s salary history is not job-related and that reliance on salary history perpetuates sex discrimination.

The Ninth Circuit is the federal court of appeals for California, Oregon, Washington, Arizona, Nevada, Idaho, Montana, Alaska, and Hawaii. This decision, then, is not binding on federal courts in Virginia and elsewhere, but it is likely to influence how other federal courts review pay discrimination claims under the Equal Pay Act and Title VII of the Civil Rights Act of 1964, which also prohibits pay discrimination based on sex (and other protected characteristics).

Sex discrimination has been receiving heightened attention recently. Employers should review their pay practices and evaluate whether they are paying similar amounts to employees who perform similar work. Where there are discrepancies, employers need to determine whether there is a legitimate reason and, if not, decide how to rectify the problem.