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Federal Appeals Court Rules for Education Administrator in Equal Pay Act Case

Ruling in the case of a California educational administrator, a federal appeals court has issued a landmark decision that prior salary—whether alone or in combination with other factors—may not justify a difference in pay between male and female workers doing the same job.

The ruling under the federal Equal Pay Act of 1963 by the U.S. Court of Appeals for the 9th Circuit, based in San Francisco, was noteworthy for several reasons. One is that it was issued by an 11-member panel, which is what the 9th Circuit uses for its "en banc" proceedings rather than its full slate of 29 active-duty judges.

Secondly, the opinion was written by Judge Stephen R. Reinhardt, a liberal icon of the federal judiciary who died last week at age 87. The 9th Circuit explained in a footnote attached to the opinion that "Prior to his death, Judge Reinhardt fully participated in this case and authored this opinion. The majority opinion and all concurrences were final, and voting was completed by the en banc court prior to his death." (Such an outcome would not occur in the U.S. Supreme Court, where the death of a justice invalidates any votes and opinions in pending cases.)

The April 9 decision came in the case of Aileen Rizo, a former middle school and high school mathematics teacher who was hired in 2009 by the Fresno County, Calif., Office of Education for the staff position of math consultant. Such offices provide a range of services to individual school districts, and the Fresno education office's math consultants help train classroom math teachers in new methods, among other duties, according to court papers.

The education office had a standard operating procedure of basing pay for new hires on their most recent prior salary, adding a small percentage, and placing the hire on the corresponding step of its salary schedule.

Rizo had been earning $52,000 as a math teacher in Arizona before accepting the Fresno County math consultant's job at a salary of $62,133, which included a $600 stipend for her master's degree, court papers say.

During a lunch with her colleagues in 2012, Rizo learned that her male colleagues had been hired as math consultants at higher steps on the office's salary scale. Court papers say one man had been hired at $73,832, another man at $79,088, but also one woman at $76,414.

Rizo complained to her employer, which said that all salaries had been set in accordance with the standard operating procedure. The agency also said it reviewed all management hiring over a 25-year period and found that its policy had placed more women at higher compensation steps than men.

Rizo disputed the analysis, and she sued Fresno County Superintendent of Education Jim Yovino in his official capacity, under the Equal Pay Act and other laws.

The agency sought summary judgment on the argument that basing starting pay on a worker's prior pay was a permissible defense under the Equal Pay Act. The statute permits male and female pay differentials for equal work under four exceptions: a seniority system, a merit-pay system, a system which measures earnings by quantity or quality of production, or because of a differential based on "any other factor other than sex."

The education agency cited the fourth exception, arguing that it applies when an employee's starting salary is based on her prior salary. 

The 9th Circuit, in its decision in Rizo v. Yovino, ruled unanimously to revive Rizo's case, but the 11 judges disagreed on their rationales.

Reinhardt wrote for six judges, constituting a majority of the panel, that the "catchall" exception to liability under the Equal Pay Act does not cover salary decisions based entirely on prior pay.

"We conclude, unhesitatingly, that 'any other factor other than sex' is limited to legitimate, job-related factors such as a prospective employee's experience, educational background, ability, or prior job performance," Reinhardt wrote for the majority. "It is inconceivable that Congress, in an act the primary purpose of which was to eliminate long-existing 'endemic' sex- based wage disparities, would create an exception for basing new hires' salaries on those very disparities."

Reinhardt said prior pay may bear a rough relationship to legitimate factors other than sex, such as training, education, ability, or experience, "but the relationship is attenuated."

"More important, it may well operate to perpetuate the wage disparities prohibited under the act," he said. "Rather than use a second-rate surrogate that likely masks continuing inequities, the employer must instead point directly to the underlying factors for which prior salary is a rough proxy, at best, if it is to prove its wage differential is justified under the catchall exception."

Reinhardt noted that the 1963 statute, while having laudable aims, has not eliminated the disparities in pay between male and female workers across the U.S. economy.

"If money talks, ... women are told they are not worth as much as men," the judge said. "Allowing prior salary to justify a wage differential perpetuates this message, entrenching in salary systems an obvious means of discrimination—the very discrimination that the act was designed to prohibit and rectify."

The five other judges on the 9th Circuit panel wrote or joined three concurring opinions saying they would not go as far as the majority.

Judge M. Margaret McKeown, joined by one other judge, agreed with the majority that Rizo's situation provided, as McKeown put it, " a textbook violation of the 'equal pay for equal work' mantra of the Equal Pay Act." But she did not agree that employers may never use past pay as a factor in setting initial wages.

"Using prior salary along with valid job-related factors such as education, past performance and training may provide a lawful benchmark for starting salary in appropriate cases," McKeown said. She noted that this was the position taken in a friend-of-the-court brief filed by the U.S. Equal Employment Opportunity Commission in Rizo's case.

Judge Consuelo M. Callahan, in another concurrence joined by one other judge, wrote that the majority failed to follow Supreme Court precedent and unnecessarily ignored the realities of business in holding that prior pay can never be considered in setting initial compensation.

And in an opinion concurring in the judgment, Judge Paul J. Watford wrote that in his view, past pay can constitute a "factor other than sex" under the Equal Pay Act, but only if an employee's past pay is not itself a reflection of sex discrimination.

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