by Alexandra Saddik and Jon Babione

Under the federal Equal Pay Act, an employer is expected to provide “equal pay for equal work.” Four affirmative defenses to the Equal Pay Act are (1) seniority, (2) merit, (3) earnings based on “quantity or quality of production,” or (4) “a differential based on any other factor other than sex.”

The Ninth Circuit clarified this last factor in Rizo v. Yovino. The plaintiff, a female math consultant who had worked for the Fresno County Office of Education for three years found out that, despite being better qualified, she was paid less than her male colleagues. Plaintiff’s employer told her that she was subject to a policy that was applied equally in which prior pay was considered in determining employee wages.

In an en banc decision, the Court held that the prior rate of pay is not a factor other than sex; therefore, it is not an affirmative defense to a prima facie showing of a violation of the Equal Pay Act. The Court agreed with Plaintiff’s argument that reliance on prior rate of pay would perpetuate the gender gap, which contradicts the intended purpose of the Equal Pay Act.

Additionally, the Court concluded the wording of the law intends the “differential based on any other factor other than sex” to be construed narrowly. Based on this narrow interpretation, the “other factor other than sex” is limited to job-related factors. Prior pay is not a job-related factor, and thus does not fall under this defense. The Court therefore overruled Kouba v. Allstate Insurance Co., which allowed prior pay provided that employers considered it “reasonably to advance an acceptable business reason.”

Rizo marks a shift in how employers can structure employee pay without violating the Equal Pay Act. Apart from ensuring and/or removing prior pay as a consideration in the pay structure, employers need to account for the fact that the definition of what ‘a factor other than sex’ has been significantly narrowed through this holding. In assessing pay structure, employers should pay attention to elements considered in determining employee pay and the possible impact those elements will have on male employees versus female employees.

Ferber Law is ready to assist you with any questions or concerns you may have about whether you and/or your business is compliant with this new interpretation of the Equal Pay Act.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.