Posted by HELEN CHRISTOPHIA (www.courthousenews.com)

April 9, 2018

 

SAN FRANCISCO (CN) a The en banc Ninth Circuit ruled Monday that employers canat justify different pay grades for male and female employees by using salary history alone, reversing a 3-

judge appellate panel and overturning more than three decades of circuit case law.

aTo hold otherwise a to allow employers to capitalize on the persistence of the wage gap andA perpetuate that gap ad infinitum a would be contrary to the text and history of the Equal Pay Act, and

would vitiate the very purpose for which the Act stands,a Circuit Judge Stephen Reinhardt wrote forA the panel in one of his final opinions before his death in March.

Math consultant Aileen Rizo sued the Fresno, California, school district in 2014 under the Equal PayA Act, which requires employers to pay women and men the same wages for the same job. She

claimed the district paid her thousands of dollars less than three male colleagues to instruct the countyas math teachers despite having more experience.

The school district moved for summary judgment, denying gender discrimination was the reason itA paid Rizo less. An employer is exempt from the Equal Pay Act if it can show that a difference in payA is due to one of four exceptions. Fresno relied on the lawas fourth exception to argue that the wageA disparity between Rizo and her male colleagues instead stemmed from its pay structure and not aA afactor other than sex.a

Fresnoas pay structure, implemented in 2004, bases an incoming employeeas salary solely on salaryA history. Management-level employees like Rizo get a 5 percent increase from their previous salaryA and a bonus for a masteras degree. Rizo earned $62,133, the minimum starting salary for aA management-level educator in Fresno.

Rizo argued that because women are paid less than men for the same job, salary history is not aA afactor other than sexa and using it to set starting pay is illegal.

Fresno countered the Ninth Circuit had already decided in 1982as Kouba v. Allstate Ins. Co. that theA Equal Pay Act allows an employer to consider prior salary in setting starting pay.

In Kouba, the court held that an employer seeking to justify a pay disparity as based on a factor otherA than sex must prove it has an aacceptable business reasona for doing so.

Fresno said it based starting salaries on salary history to ensure a fair compensation structure, attractA quality employees and spend taxpayer dollars responsibly a all legitimate business reasons, it

argued.

But U.S. Magistrate Judge Michael Seng denied Fresnoas motion in 2015, finding its pay structureA perpetuates wage disparities between male and female employees.

He refused to consider Kouba, pointing out that salary history was one of several factors theA employer in that case considered in setting salaries but the only factor Fresno considered.

Last April, a three-judge Ninth Circuit panel made up of Senior Circuit Judge A. Wallace Tashima,A Circuit Judge Andrew Hurwitz and U.S. District Judge Lynn Adelman of the Eastern District of

Wisconsin concluded they were bound by Kouba and held prior salary can be a factor other than sexA if the defendant shows that its use of prior salary is reasonable and achieves a business purpose.

But the full court on Monday overturned Kouba by finding a factor other than sex must be job-related,A rather than one that achieves a business purpose. It concluded prior salary is not job-related andA aperpetuates the very gender-based assumptions about the value of work that the Equal Pay Act wasA designed to end.a

aIt is inconceivable that Congress, in an act the primary purpose of which was to eliminate longexistingA aendemica sex-based wage disparities, would create an exception for basing new hiresa

salaries on those very disparities a disparities that Congress declared are not only related to sex butA caused by sex,a Reinhardt wrote. aTo accept the countyas argument would be to perpetuate ratherA than eliminate the pervasive discrimination at which the act was aimed.a

Mondayas decision maintains a circuit split on the issue: the 10th and 11th circuits have ruled thatA employers are not exempt from Equal Pay Act claims when pay structures based on prior salary

result in pay inequity; the Seventh and Eighth circuits have found the opposite.

aBy overturning Kouba, they have created a new rule in the Ninth Circuit which is consistent with whatA is happening in other courts and have gotten rid of a decision that is contrary to the inalterableA direction that things are moving in,a Dan Siegel, Rizoas attorney with Siegel, Yee & Brunner inA Oakland, California, said by phone.

Five judges concurred in the majority opinion but expressed disagreements with parts of it.

Circuit Judge Paul Watford said past pay can be a factor other than sex, but only if an employeeasA past pay isnat a result of sex discrimination.

Circuit judges Consuelo Callahan and Richard Tallman said the majority failed to follow SupremeA Court precedent and ignored the realities of doing business, potentially hindering equal pay instead ofA promoting it.

McKeownA Circuit judges M. Margaret McKeown and Mary Murguia said the opinion went too far in holding thatA no consideration of prior pay is permissible under the Equal Pay Act, even if assessed with other jobrelatedA factors.

Siegel disagreed with their views.

aIf a business were to say, aIam going to set a personas salary 99 percent based on experience andA qualifications and 1 percent based on race, we would understand whatas wrong with that,a he said.
aThe idea that you can somehow discriminate a little bit I think is contrary to the direction of the law.a

Michael Woods, the school districtas lawyer with McCormick Barstow in Fresno, said the district plansA to petition the Supreme Court for review.

aWe remain confident that the policy of determining salaries by the Fresno County Superintendent ofA Schools, which was in effect through Dec. 31, 2015, was absolutely gender-neutral, objective andA effective in attracting qualified applicants and complied with all applicable laws,a Woods said in aA statement. aFCSSa policy was applied to more than 3,000 employees over 17 years, was similar toA policies used by many other employers, and had no disparate impact on female employees, whoA make up the majority of FCSS employees and its senior administrative staff.a

A middle school and high school math teacher in Phoenix since 1996, Rizo also designed the mathA curriculum for an online school before taking a job with Fresno County in 2009.

In 2012, Rizo was having lunch with a newly hired male math consultant when he told her he hadA been started on Step 9 of the salary scale. Later, she said, she learned that two other maleA consultants had both been started on Step 7. Rizo was started on Step 1, despite having moreA experience, she said. Pay on the 10-step salary scale ranges between $62,133 and $81,461.

Soon after, Rizo filed a complaint with the school district. The district refused to raise her salary andA reprimanded her supervisor for talking about pay with her, she said.

In response to her complaint, however, Fresno reviewed the initial salary placement of about 65A current male and female management employees hired over the past 25 years. According to theA district, the data revealed that the pay structure ahas not resulted in a disproportionate impact onA gender,a with women having been placed on higher salary steps than men overall.

Rizo called the data aincredibly flawed and unusablea because it included employees hired beforeA 2004 under a different pay structure that also assessed education and experience.

According to the Bureau of Labor Statistics, female middle school teachers in 2016 made 87 cents forA every dollar male middle school teachers made. Female high school teachers made just under 94A cents for every dollar paid to male high school teachers that year.

Chief Circuit Judge Sidney Thomas and circuit judges Marsha Berzon, Morgan Christen, WilliamA Fletcher and Richard Paez also sat on the panel.