Basing pay on salary history creates risk of EPA violation

It’s very common for employers to ask job applicants for their salary history to determine how to set their pay. But if a recent decision from a federal appeals court is any indication, that’s a dangerous practice, particularly if you’re using it to determine the salary of a female employee.

In that case, Aileen Rizo took a job as a math consultant in the Fresno, Calif., public school system. To calculate her pay, the district took her most recent salary, added five percent and put her at the corresponding step on the salary chart.

Before taking the job, Rizo made about $50,000 a year as a math teacher in Arizona. Even with the five percent increase, however, her new salary was at the bottom of the Fresno pay schedule. It also resulted in her being paid less than an apparently less-experienced male employee who did the same work but because of his salary history was hired at a much higher step on the schedule.

Rizo took the district to court, arguing that it violated the federal Equal Pay Act by using her salary history as an excuse to pay her less than males doing the same job.

The district argued her claim should fail because the pay disparity was based on a “factor other than sex.” A federal trial court judge agreed and dismissed the case.

But the 9th Circuit reversed, agreeing with Rizo’s argument that using prior salary alone to calculate current pay just perpetuates a pay gap that already exists due to prior sex discrimination and is contrary to the Equal Pay Act’s goal of addressing the wage gap.

This, of course, doesn’t mean there are no permissible reasons to consider a worker’s salary history. But the law can be complicated, so it’s a good idea to consult with an employment attorney to make sure your own pay practices don’t get you in trouble.

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