Supreme Court Denies Review of Salary History Defense in Pay Equity

The U.S. Supreme Court recently declined to consider a case that would have addressed the validity of a common defense used by employers to justify pay discrepancies between male and female employees in the same job.

In Yovino v. Rizo, a math consultant sued her employer under the Equal Pay Act  (“EPA”) after she learned that she was paid $10,000 less than male co-workers for the same work, even though she had more education and experience.

The EPA provides that pay differentials cannot be based on sex but can be based “on any other factor”. The employer in this case set starting salaries based upon the employee’s salary at their prior job.  It contended that Ms. Rizo’s salary was not lower because of her gender, but because of her salary at her previous job, and that consideration of salary history affected male and female employees equally. This defense to an EPA claim has been coined the “salary history defense.”

The Ninth Circuit Court of Appeals in California rejected the defense and held that a clear inequity in pay between genders violated the EPA.  The court stated, “[a]llowing employers to escape liability by relying on employees’ prior pay would defeat the purpose of the Act and perpetuate the very discrimination the EPA aims to eliminate.”

Other Courts of Appeals have differing views on the viability of the defense.  The Seventh and Eighth Circuit Courts of Appeals appear to accept the defense against EPA claims, while there is no consensus in the Second, Sixth, Tenth, and Eleventh Circuits, which consider the defense on a case-by-case basis.

The gender pay gap continues to be a problem across the country. A 2020 study  found that, on average, women earn 81 cents for every dollar earned by men.  Recognizing this, 19 states now prohibit employers from asking job candidates their salary history, including New York and Connecticut (New Jersey bans salary inquiries by state but not private employers).  The Equal Employment Opportunity Commission has said that allowing employers to base pay on past salaries leads to a perpetuation of the gender pay gap; however, some employers continue to contend that past salary information is necessary to determine pay for new employees.

It remains to be seen whether the Supreme Court will consider this issue in the future.  Stay tuned.