Rizo v. Yovino

THE NINTH CIRCUIT’S RULING IN RIZO V. YOVINO MAKES IT HARDER FOR ARIZONA EMPLOYERS TO PAY WOMEN LOWER SALARIES THAN THEIR MALE COUNTERPARTS.

In 1963, Congress passed the Equal Pay Act (EPA), and it was signed into law by John F. Kennedy on June 10, 1963. The purpose of the EPA was to abolish pay discrepancies between men and women by mandating that employers could not consider gender in salary decisions. More than 50 years have passed, and there are still controversies over how to interpret the EPA. Some employers, believing men deserved higher salaries, developed work-around solutions to perpetuate the inequities.

The most recent legal controversy came up in the Ninth Circuit Federal Court of Appeals. The issue before the Court was this: Can an employer consider the past salary of a new employee to determine the new hire’s rate of pay?

How the Rizo Case Arose.

Aileen Rizo was hired by the Fresno County Office of Education in 2009 as a math consultant. This was a management position. Prior to the Fresno job, Aileen had worked as a school teacher in Arizona for 13 years. The Fresno Schools gave her a starting salary of $62,733. Several years later, in 2012, Aileen was having lunch with colleagues when the conversation turned to salaries. She learned that a man just hired as a math consultant received a starting salary of $79,000, far higher than what she was earning and $16,000 more than her starting pay. Aileen later learned that all the men in similar jobs made more money than she did. Aileen sued based on the 1963 Equal Pay Act. Her employer defended its decision, arguing that its salary decisions were not based on gender. They were based on how much the employee had earned at his or her previous job. Fresno County asked the Court for summary judgment, arguing that prior case decisions meant it was entitled to judgment as a matter of law.

The judge in the Federal District Court ruled in Aileen Rizo’s favor by denying the county’s motion for summary judgment. U.S. Magistrate Judge Michael Seng wrote that the practice of basing salary on prior wages “is so inherently fraught with the risk – indeed, here, the virtual certainty – that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose.”

However, at Fresno’s urging, Judge Seng did agree to allow an interlocutory appeal to the Ninth Circuit. (An interlocutory appeal is one where the underlying case is not yet resolved by a judgment. It is basically an appeal in the middle of an ongoing case.). Fresno County filed its appeal to the Ninth Circuit. The initial ruling was issued by a 3-judge panel that reversed the ruling of the District Court based on a 1982 case: Kouba v. Allstate Insurance Company, 691 F.3d 873 (9th Cir. 1982). The Kouba case dealt with a similar issue and held that prior salary could be considered in determining a new hire’s rate of pay because “it was a factor other than sex.”

When Aileen Rizo’s lawyers presented a strong argument for a reconsideration by the Court en banc , the Ninth Circuit decided the case was so important that it should be argued to the entire Court, not just a small panel of judges. Rizo’s arguments were backed by briefs filed by several civil rights organizations and unions as well as the EEOC. When the entire court heard the arguments, it reached a decision contrary to that of the smaller panel and overturned the Kouba decision.. In its April 9, 2018 opinion, the Court wrote:

“In light of the clear intent and purpose of the Equal Pay Act, it is . . . clear that we cannot construe the catchall exception as justifying setting employees’ starting salaries on the basis of their prior pay. At the time of the passage of the Act, an employee’s prior pay would have reflected a discriminatory marketplace that valued the equal work of one sex over the other. Congress simply could not have intended to allow employers to rely on these discriminatory wages as a justification for continuing to perpetuate wage differentials.”

The majority of the Court noted that this same issue had come before other Federal Appellate Courts, and the Second and Sixth Circuits came to the same conclusion and required wage determining factors to be directly job related, citing things like experience, educational background, or prior job performance as legitimate factors in determining salary. The Court also noted that other circuits had reached different conclusions. The Seventh Circuit held that prior salary is a legitimate basis for setting starting pay. The Tenth and Eleventh Circuits reached the same conclusion as the concurring judges in Rizo. Prior salary may be considered but only if it is but one of several factors used to determine starting pay.

Four of the eleven judges concurred in the Rizo decision. Concurring means that those judges mostly agreed with the decision, but there were areas where they differed. They concurred rather than joining with the majority because while they agreed that using prior salary as the sole determining factor in setting starting pay was discriminatory, they argued prior salary could be used if it was used in combination with other job-related factors. They agreed Rizo’s starting salary was discriminatory, but they disagreed with the majority’s finding that prior salary could never be considered.

What Does the Rizo Case Mean for the Future?

Currently, it means that employers in the Ninth Circuit states of California, Oregon, Washington, Idaho, Montana, Nevada, Arizona. Alaska, and Hawaii must take steps to be sure that prior salary is not used for setting wages when a new employee is hired. Employers may not ask applicants to reveal their previous salary. Will the Rizo case be appealed to the United States Supreme Court? It is possible. However, the Supreme Court takes very few of the thousands of cases presented. Will Fresno County want to spend the time and the money to push the case even further? Chances are the County will let the issue rest, but the Ninth Circuit ruling is very recent. There is plenty of time for Fresno to appeal.

For many of us, the real question is why this issue is still in controversy more than 50 years after the EPA became law. Fifty years – and women are still fighting for equal pay for doing the same job as a man.

Resources

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/04/09/16-15372.pdf

www.eeoc.gov/laws/statutes/epa.cfm

Sources

The resources listed above.

www.employmentlawblog.info/2018/04/rizo-v-yovino-no-16-15372-9th-cir-apr-9-2018-en-banc.shtml

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/04/09/16-15372.pdf

www.abajournal.com/news/article/woman_employee_pay_past_salary_9th_circuiit