Women Can Legally Be Paid Less Based on Salary History, Court Rules

The ruling in California will perpetuate pay discrimination based on gender.

Employers can legally pay women less than men based off of a woman's salary history, a court ruled last week — an employment practice that perpetuates the gender wage gap.

The 9th U.S. Circuit Court of Appeals in California overturned a 2015 lower court ruling that basing salaries exclusively on pay history is discriminatory against women.

In its 3-0 decision, the federal court cited a 1982 ruling that determined "prior salary alone can be a 'factor other than sex' if the defendant shows that its use of prior salary was reasonable and effectuated a business policy."

The case was brought on by Aileen Rizo, a public schools employee in Fresno County. In 2012 Rizo discovered that her male colleagues were making more money than her for the same work.

Rizo was hired as a math consultant in 2009 with a total starting salary of $62,733. Policy dictated that Rizo would receive a 5 percent increase over her previous salary. But this was not enough to bring her up to the minimum salary for the position, so the county bumped her up to what was considered a Level 1, Step 1 salary. She later found that a male employee who had just been hired was being paid a Level 1, Step 9 salary, based on salary history.

"The logic of the decision is hard to accept," said Dan Siegel, Rizo's attorney. "You're OK'ing a system that perpetuates the inequity in compensation for women."

The 2015 ruling that was overturned, made by U.S. Magistrate Judge Michael Seng, concluded that basing pay on salary history was discriminatory because lower wages for women were likely the result of gender discrimination at the woman's previous job.

"This decision is a step in the wrong direction if we're trying to really ensure that women have work opportunities of equal pay," Deborah Rhode, a gender equity law professor at Stanford Law School, explained to the Associated Press. "You can't allow prior discriminatory salary setting to justify future ones or you perpetuate the discrimination."

Siegel said he and Rizo had not yet determined the next step but could see the case going to the Supreme Court, the AP reported.

While rates vary by state, women make roughly 80 cents for every dollar a man earns. In 2015 the median income for a woman was $40,742, versus $51,212 for a man.

Trends indicate that, without government action, the gap will not be quick to close itself. According to the U.S. Census' income report released in 2016, the female-to-male earnings ratio was not statistically different between 2014 and 2015, going up from 0.79 to 0.80. The ratio has not increased significantly since 2007, when it increased to 0.778, up from 0.769 in 2006. In 1960, the earliest data the report provides, the ratio was 0.607.

According to the National Partnership for Women and Families, Black and Hispanic women earn considerably less when compared to white men. Black women earn roughly 63 cents for a white man's dollar, and Hispanic women earn just 54 cents. Asian women earn about 85 cents to the white man's dollar, but this amount may vary by ethnic subgroups.

Millennial women are already seeing a pay gap worse than the national average. The newest generation of working men earn a median salary of $39,100, versus $28,800 for millennial women — an earnings ratio of roughly 74 percent.

Other places are taking steps to combat the perpetuation of gender pay discrimination. In August 2016 Massachusetts Gov. Charlie Baker (R) signed a law, which will take effect in July 2018, stating that employers in Massachusetts can no longer ask potential employees about their salary history during a job interview. The law also forbids employers from penalizing employees who openly discuss their salaries with one another. By punishing workers who talk about their wages, women are less likely to find out if they are in fact being underpaid.

In addition, employers must now pay men and women equally if they do "comparable work," rather than doing the exact same jobs, which was the previous practice. The law defines this as "work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability."

In November New York City Mayor Bill de Blasio (D) issued an executive order forbidding government agencies from asking job seekers questions regarding salary history. The policy, which went into effect in December, also forbids government agencies from looking for public records containing information on prior compensation. Agencies can only inquire after the fact to verify previous employment.

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