Salary History Inquiries Under the Equal Pay Act

By:  Melanie M. Dunajeski

The Equal Pay Act of 1963 (“EPA”) requires men and women be given equal pay for equal work—or rather substantially equal work in the same establishment. More than fifty years on, women’s pay hovers around 80 cents for each dollar that a man earns. Is this pay disparity perpetuated by using prior salary history in determining pay for incoming employees—and could the use of salary history be a violation of the EPA?  The answer is perhaps, depending on where you work, for now.

Earlier this year, the United States Court of Appeals for the Ninth Circuit (yes-that includes California) decided a case that involved a female schoolteacher who discovered that a man hired to do similar work was given a starting salary significantly higher than hers.  She complained, and her employer explained that new employee’s salaries were based on their salary history, and since the man had a higher salary at his prior job, the employer paid him more. The female teacher filed suit claiming that this was sex discrimination under the EPA. The EPA requires equal pay for equal work unless the difference in pay is justified by (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) “a differential based on any factor other than sex.” The employer argued that prior salary history was a “factor other than sex” and won at the trial court level, before being reversed by the full Ninth Circuit Court of Appeals sitting en banc who held that “salary history” is not  “factor other than sex” under the EPA since it was not a legitimate, job related factor such as experience, education, ability, or performance.  The employer has now filed a Petition for Writ of Certiorari to take this matter to the U.S. Supreme Court—correctly pointing out that there is an “extreme” split among the circuits as to whether prior pay is a “factor other than sex”—for example, the Seventh Circuit (encompassing Indiana) and the Eighth Circuit have held that an employer can use prior pay—even by itself. Four other circuits have held that prior pay “sometimes” counts as a “factor other than sex,” and others adopt different styles of sometimes-you-can-sometimes-you-can’t positions.  We won’t know until later this year whether the Supreme Court will take on this issue.

To make matters more interesting, several states and localities (apparently not finding the federal EPA a reliable remedy for sex-based pay discrimination) have recently adopted statutes and ordinances forbidding salary history inquiries—including Connecticut, Massachusetts, Delaware, Oregon, California, New York City, and Philadelphia.  One need not look any further than the #MeToo events of 2017-2018 to begin to recognize a change in public perception and opinion on an issue.

So, what can an employer do?  For starters, unless there is some truly compelling reason to do so, stop asking applicants and interviewees about their salary histories.  If you need to know if an applicant is in the same “ballpark,” you could ask about what the applicant’s salary expectations are.  More importantly, this is a good time to look at all your pay practices. What are your employees really doing? You may be surprised to find that two people with different job descriptions are actually doing the same or similar work. If you do find instances where employees doing the same or similar work are paid differently, you need to examine whether that discrepancy is supported by one of the legitimate reasons for pay differential under the EPA—then make the pay changes necessary.