Developments in Equal Pay Litigation

© 2021 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 29 effectuates some business policy and the employer uses prior salary reasonably in light of its stated purpose as well as its other practices. 216 On April 9, 2018, the Ninth Circuit, sitting en banc , reversed the panel decision and overruled Kouba , holding that “[r]eliance on past wages simply perpetuates the past pervasive discrimination that the Equal Pay Act seeks to eradicate. Therefore, we readily reach the conclusion that past salary may not be used as a factor in initial wage setting, alone or in conjunction with less invidious factors.” 217 According to the Ninth Circuit, a legitimate “factor other than sex” must be “job related,” which automatically excludes the use of prior salary: “[a]t the time of the passage of the Act, an employee's prior pay would have reflected a discriminatory marketplace that valued the equal work of one sex over the other. Congress simply could not have intended to allow employers to rely on these discriminatory wages as a justification for continuing to perpetuate wage differentials.” 218 However, on February 25, 2019, the Supreme Court reversed the en banc decision of the Ninth Circuit because the author of that decision, the Honorable Stephen Reinhardt, had died before the decision was filed and therefore could not be counted in the en banc majority. 219 Without Judge Reinhardt’s vote, the Ninth Circuit’s decision would have been approved by only five of the ten judges on the en banc panel. 220 On February 27, 2020, the Ninth Circuit, sitting en banc , issued another decision holding – again – that prior salary cannot be used as the sole “factor other than sex” to justify pay differences under the federal EPA. 221 The new decision echoed Judge Reinhardt’s April 2018 opinion, holding that past salary is not a “factor other than sex” and reviving plaintiff’s suit under the EPA. Writing for the majority, Judge Morgan Christen wrote that “setting wages based on prior pay risks perpetuating the history of sex-based wage discrimination. ” 222 She also wrote: “[t]he express purpose of the act was to eradicate the practice of paying women less simply because they are women. Allowing 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.” 223 The Ninth Circuit’s decision in Rizo v. Yovino adds to a growing split among the Courts of Appeals on this issue. For example, the Seventh Circuit came to the opposite conclusion in Lauderdale v. Illinois Department of Human Services . 224 The Seventh Circuit’s prior decisions had consistently held that a 216 See Kouba v. Allstate Ins. Co. , 691 F.2d 873, 876-77 (9th Cir. 1982). 217 Rizo v. Yovino , 887 F. 3d at 468. A three-judge panel of the Ninth Circuit initially reversed, holding that its decision was controlled by Kouba . Because the district court had not evaluated whether the county’s use of prior salary effectuated a business policy, or whether its reasons for doing so were reasonable, the decision was vacated and remanded to the district court for further consideration. Rizo , 854 F.3d at 1167. However, the Ninth Circuit then announced that it would rehear the case en banc. Rizo v. Yovino , 869 F.3d 1004 (9th Cir. 2017). 218 Id. at 461. 219 Yovino v. Rizo , 139 S.Ct. 706 (2019). 220 Id. at 708. According to the Supreme Court, “it is generally understood that a judge may change his or her position up to the very moment when a decision is released,” and “a case or controversy is ‘determined’ when it is decided.” Id. at (quoting United States v. American-Foreign S. S. Corp. , 363 U.S. 685, 688 (1960). Allowing Judge Reinhardt to cast a vote for a decision filed after his death would ”effectively allow[] a deceased judge to exercise the judicial power of the United States after his death,” a practice that would run afoul of the constitutional dictate that “federal judges are appointed for life, not for eternity.” Id. 221 Rizo v. Yovino , 950 F.3d 1217 (9th Cir. 2020). 222 Id. at 1228. 223 Id. at 1219. In concurring opinions, two judges said their colleagues should have taken the more moderate approach of some other circuits. Judge Margaret McKeown said the policy did not justify the disparity between plaintiff’s pay and that of her male coworkers, but salary history “may provide a lawful benchmark” for setting pay if considered alongside other factors such as education and training. Id. at 1234. Judge Consuelo Callahan also concurred, joined by Judges Tallman and Carlos Bea. She stated that an employer should be permitted to use past salary as a factor in setting pay, as long as its use “does not reflect, perpetuate, or in any way encourage gender discrimination.” Id. at 1241. 224 Lauderdale v. Ill. Dep’t of Human Servs. , 876 F.3d 904 (7th Cir. 2017). In this case, the Seventh Circuit held that the Illinois pay plan for state employees did not violate the EPA by basing pay increases, at least in part, on an employee’s prior salary. The Department had conceded that plaintiff had established a prima facie case under the EPA because she had taken over the same responsibilities as her predecessor but was paid less. Id. at 907-08. She was therefore paid less for work that was equal to, if not