The Ninth Circuit recently ruled that salary history is no defense to a claim of sex discrimination under the federal Equal Pay Act, effectively expanding from the West Coast to the entire circuit a ban on a previously common hiring practice.

California, Oregon, Washington, and Hawaii have statutory bans on inquiring about job applicants’ salary history and/or using it to set a new hire’s pay under state laws. But the Ninth Circuit, after hearing Rizo v. Yovino, held that federal law prohibits using prior salary as an affirmative defense to claims of sex discrimination under the Equal Pay Act.

The Equal Pay Act, in simple terms, is supposed to ensure equal wages for equal work.  If an employee can establish a sex-based wage differential, the employer is required to show that the differential is unrelated to gender.  It can do so using four affirmative defenses: (1) seniority, (2) merit, (3) some measure of quantity or quality, or (4) “any other factor other than sex.” 29 U.S.C. § 206(d)(1).

The question in Rizo was whether salary history qualified as “any other factor.”  The Court said “no.”  It reasoned that relying on past pay effectively permitted “deeply rooted” pay discrimination between male and female employees to continue.

In making the ruling, the Court joined a circuit split on the question.  Currently, the Second, Fourth, Ninth, and Tenth hold that salary history cannot be used as a defense.  The Seventh Circuit has held that it may be, while the Eighth Circuit has held that the question requires case-by-case analysis.

The split makes the issue ripe for review by the U.S. Supreme Court, but in the meantime, an increasing number of state legislatures are taking matters into their own hands.  Sixteen states have enacted some form of salary history restriction, and multiple other cities and counties have their own.  Other states have taken the opposite approach, essentially “banning the ban.”  Michigan and Wisconsin, for example, have passed laws prohibiting local governmental bodies from enacting laws which would prevent an employer from inquiring about an applicant’s prior salary.

Hiring managers should be aware of the restrictions in their jurisdictions, and all employers should be mindful that they must be able to articulate pay differentials between employees performing equal work.

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