Ninth Circuit Rules that Salary History Cannot Justify Pay Disparities

Ninth Circuit Rules that Salary History Cannot Justify Pay Disparities

On April 9, 2018, the Ninth Circuit ruled that employers may not consider a new employee’s prior salary when setting his or her pay, either on its own or with other factors such as years of experience. The Court ruled that allowing employers to rely on prior salaries is incompatible with the broad principle of the Equal Pay Act, which states that men and women should receive equal pay for work. The ruling, however, left many unanswered questions including, whether prior salary may be considered in the context of individual negotiations, when the employee volunteers the information, or whether it applies to promotions. Pablo Orozco, Nilan Johnson Lewis employment attorney, who is also licensed in California, advises employers in the Ninth Circuit to ensure their recruiting practices comply with this latest change in regulation. “The easiest way to ensure compliance would be to instruct HR personnel and recruiters to ask about salary expectations, not prior salary,” says Orozco. To avoid any chance of pay equity litigation, employers should also consider auditing their equal pay practices generally, as the field may change rapidly as similar cases make their way through the courts. For more information about pay equity audits, and gender-based employment practices, contact Pablo Orozco at 612.305.7229 or porozco@nilanjohnson.com.

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