Evolving Law Becoming Tougher in Prohibiting Gender Discrimination in Employee Pay
Legislators have for many years sought to strengthen state and federal laws in order to prevent employers from engaging in gender discrimination as to pay (or punish them if they do). On the federal side, the 1963 Equal Pay Act generally bars employers from paying men and women different amounts for the same work. However, that law also has several exceptions, allowing employers to avoid liability for pay discrepancies between men and women if the discrepancy is based on a non-discriminatory “factor other than sex”, such as seniority, merit, or quantity or quality of work. One frequent defense to pay equity claims has been that the pay gap stemmed from the workers’ past salaries. More than thirty years ago, the Seventh Circuit federal appellate court held that salary history is a legitimate defense to a pay equity claim, as it found that employers’ consideration of salary history is a “factor other than sex”. Other federal appellate circuits have agreed if other non-sex factors are also considered, such as skills, experience etc.
Over the thirty years since the Seventh Circuit decision, advocates have argued continuously that allowing salary history as a defense to Equal Pay Act claims perpetuates salary inequity for women, and some courts and legislators have agreed. One such court, the Ninth Circuit federal appellate court, just issued a ruling on Thursday, February 27, 2020, finding that pay gaps for Fresno County,California, female teachers cannot be excused by reliance on a policy of paying incoming teachers a set premium above their past salaries. This decision adds to the split between the federal circuits on the salary history defense under the Equal Pay Act, which means it is possible the United States Supreme Court may at some point choose to step in and resolve the issue. Many commentators believe the attention on the split will remain high and increase the odds of the Supreme Court taking up the issue, with some opining that the more conservative members of the Court may side with the Seventh Circuit and find that Congress should determine whether salary history is a valid defense. The Ninth Circuit reasoning focused on its view that salary history is not job-related, unlike the listed Equal Pay Act exceptions of seniority, merit or quality or quantity of work, and thus allowing salary history as a defense would defeat the remedial purpose of the Act. Indeed, in a separate 1972 case, the Supreme Court has found that Congress intended the Equal Pay Act to be “broadly remedial”, and the Ninth Circuit also cited that case to support its decision.
Partly in response to the federal uncertainty as to gender pay equity, many states, including New York, have made changes to their own discrimination law to address the issue. Indeed, specifically as to salary history, as of January 6, 2020, New York employers are prohibited by state law from asking for previous pay history from applicants. In addition, as of October 8, 2019, pay differentials between men and women employed in New York are prohibited for “substantially similar” work, as opposed to only exactly equal work as in federal law. This addresses the perceived problem of employers making non-material distinctions between the work done by men and women in order to justify intentional or unintentional pay inequity.
The solution to federal and state pay equity law prohibitions, as is often the case in employment law, is securing competent employment law advice from counsel, in conjunction with frequent self-audits of the employer’s pay practices and the rationale for any pay inequity.
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