Developments in Equal Pay Litigation

28 | Developments in Equal Pay Litigation © 2021 Seyfarth Shaw LLP trial, even if they do have a meritorious defense . 211 Those cases show that courts can be reluctant to interpret the “factor other than sex” defense in a way that provides an easy path out of litigation for employers. Although broad in terms of what it will recognize as legitimate bases to justify a pay disparity, the defense ultimately hinges on a fact and case-specific analysis that allows for few bright line rules to guide employers. That provides an advantage to plaintiffs and plaintiffs’ lawyers because, when facing the cost and uncertainty of trial, many employers may choose to settle at an inflated value rather than continue to defend a lawsuit on the merits. 2. The Use Of Salary History As A Legitimate Factor Other Than Sex At its core, equal pay litigation is about how employers set and adjust salary levels. In a free and competitive marketplace, starting salary must take some account of applicants’ prior salary. If employers cannot meet or exceed that salary, they risk losing applicants to other employers who will. One issue that comes up frequently in equal pay litigation, therefore, is whether and to what extent an employer can justify a pay disparity by pointing to employees’ prior salaries at the time they were hired. Many employers take the common sense view that they must start higher-paid applicants at a higher salary, or those applicants will not take the job. On the other hand, some courts and commentators have argued that paying employees based on past earnings only perpetuates a systemic gender pay gap that persists in the labor force. There is little debate as to whether prior history can be used at all ; courts recognize this as a legitimate factor other than sex to justify a wage disparity. The issue that has divided the federal Courts of Appeals is whether salary history by itself is enough to justify a disparity. Several recent decisions have addressed this issue. In Rizo v. Yovino , 212 an employee of Fresno County alleged that the county’s use of prior salary history to determine starting salaries was a violation of the federal EPA. 213 The county used a salary schedule to determine the starting salaries of management-level employees, which used prior salary to determine starting salaries. 214 The district court held that when a pay disparity was based exclusively on prior wages, it could not be based on a factor other than sex: “[A] pay structure based exclusively on prior wages is so inherently fraught with the risk – indeed, here, the virtual certainty – that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose. ” 215 The district court recognized that its decision was potentially in conflict with prior Ninth Circuit precedent, Kouba v. Allstate Ins. Co. , which held that prior salary can qualify as a factor other than sex, provided that the employer shows that the prior salary 211 See, e.g., Gonzales v. Cnty. of Taos , No. 17-CV-582-F, 2018 WL 3647206, at *15 (D.N.M. Aug. 1, 2018) (refusing to weigh an employer’s “other factors” at the summary judgment stage. The court held that relative levels of experience and qualifications “are questions of fact for a jury to decide and are not appropriate for summary judgment”); Ackerson v. Rector & Visitors of the Univ. of Va. , No. 3:17-CV-11, 2018 WL 3209787, at *7 (W.D. Va. June 27, 2018) (holding that two university administrators were paid at different rates because of their different credentials, experience, achievements and refusing to undertake that analysis, but holding that such “potential differences in qualifications, certifications, and employment history could explain the wage disparity between the claimants and [comparator], the EPA requires that a factor other than sex in fact explains the salary disparity”) (emphasis in original); Bowen v. Manheim Remarketing, Inc. , 882 F.3d 1358, 1363 (11th Cir. 2018) (reversing summary judgment and emphasizing employer’s “heavy burden” to establish that a factor other than sex can account for the pay differential where plaintiff’s salary had consistently been set at the low point of the compensation range, even after she had established herself in the position and demonstrated that she was an effective arbitration manager, and where plaintiff had presented evidence that the employer’s managers’ decisions were influenced by sex bias and that they took sex into account when making personnel decisions: “affidavit testimony establishes that sex-based pay disparities were common at [employer], that the managers refused to remedy the disparities, and that the managers repeatedly exhibited an unwillingness to treat women equally in the workplace”). 212 Rizo v. Yovino , 854 F.3d 1161 (9th Cir. 2017), aff’d en banc , 887 F.3d 453 (9th Cir. Apr. 9, 2018), rev’d , 139 S.Ct. 706 (2019). 213 Id. at 1163. 214 Id. To determine the step on which a new employee would begin, the county considered the employee's most recent prior salary and placed the employee on the step that corresponds to his or her prior salary, increased by 5%. Id. Because the plaintiff’s prior salary was below the Level 1, Step 1 salary, even when increased by 5%, she was automatically started at the minimum salary level. Id. at 1164. 215 Rizo v. Yovino , No. 1:14-CV-0423-MJS, 2015 WL 9260587, at *9 (E.D. Cal. Dec. 18, 2015).