The question before a federal appeals court on Tuesday centered around a common hiring practice that women's rights advocates say perpetuates the gender wage gap: whether or not an employer's use of prior salary to determine wages unfairly justifies paying women less than men.

Attorneys sparred before the en banc U.S. Court of Appeals for the Ninth Circuit, which considered the case that Aileen Rizo, a math consultant in Fresno County, California, filed in 2012. Rizo sued after she discovered she was paid less than male counterparts by as much as $10,000. The county justified the pay differential based on the previous salary she made at a school in Arizona.

A three-judge panel in April ruled the prior salary could be used to justify the pay gap. The U.S. Equal Employment Opportunity Commission and other women's rights advocates had urged the court to reconsider that decision, saying that any validation of such a practice would institutionalize the gender pay gap. Studies show women make 80 cents on the dollar to their male counterparts and that the disparities are pervasive across industries.

Several cities and states have banned salary history inquiries. California's new law, which takes effect in January, bans private and public employers from asking about a candidate's pay history. It shifts the power, as well, allowing employees to ask about what the potential salary range would be for a position.

Delaware, Massachusetts, Oregon, New Orleans, Philadelphia, Pittsburgh, New York City and Puerto Rico also have existing or pending bans on requesting salary history for either all employers or just public.

The courts have moved in different directions. Two federal appeals courts—the Tenth and Eleventh circuits—previously held that prior pay alone cannot be considered as an exemption to equal pay laws. The Seventh Circuit has ruled that previous salary could be considered.

Women's and civil rights groups, closely tracking the case in the Ninth Circuit, weighed in with friend-of-the-court briefs that urged the court to overturn the panel ruling. These included the EEOC, the National Women's Law Center and the American Civil Liberties Union. Several management groups said the court should uphold the panel's position. Watch the argument video here:

 

 

Jones Day partner Shay Dvoretzky, representing Fresno County's superintendent and Office of Education, argued the Equal Pay Act allows employers to consider “any factor other than sex” in determining salaries. He argued prior salary was a gender-neutral factor.

An employee's use of prior salary is a reasonable business consideration, Dvoretzky argued. He said, in response to questions from the panel, that the Equal Pay Act doesn't require an employer to “catch up” or equal salaries or address disparities across the company.

Many of the judges expressed skepticism to Dvoretzky's arguments.

“My broader question is: The basic purpose of the Equal Pay Act is to correct imbalances in the market based on gender,” said Judge William Fletcher. “It seems counterintuitive to the function of the statute to allow it to feed back into the pay setting, the set of pay differentials that the statute is designed to protect.”

Dvoretzky also argued the evidence did not show Rizo was paid unequally in her previous job or that there was discrimination.

“You're looking at it in terms of whether this decision was made on sex-based salary but that's not the question,” Judge Marsha Berzon said. “What did Congress mean when it passed the statute?”

Attorneys for the other side were questioned on the scope of banning prior salary, and the judges attempted to nail down their stances and also to point to whether salary history could be isolated in the pay gap data to prove causation.

Rizo's attorney, Daniel Siegel at Oakland-based Siegel & Yee, EEOC's Barbara Sloan and Equal Rights Advocates attorney Jessica Stender contented that prior salary cannot be used as a justification for pay, but it can be used in some instances in a combination of factors, which confused the judges.

“You can rely on what the salary represents but not the salary,” Berzon said in response.

'Another World'

Siegel added, in response to a question about whether salary could be considered in a world with no gender pay gap, “If we could no longer demonstrate that prior salary was a proxy for sex bias, I think we'd be in another world. I don't think it would be two years from now, it could be 30 years from now.”

Reinhart said job experience and education related to the job is relevant in determining salary, not former pay. Other judges also pinned down the question of when prior salary could be used in determining pay scale.

Stender argued it was inherently sex-based to rely on prior salary without any other factor to justify unequal pay for equal work. She added a caveat when questioned where she said employers can use the information of prior salary to entice a job applicant with a significant pay raise.

Sloan of the EEOC walked a fine line, as well, and was not unequivocal and also said that prior salary could be part of a “bundle of things that goes into the mix.”

“I think Congress' intent was to eliminate the pay gap, but I'm not sure that it says prior pay is a proxy for sex discrimination,” Sloan said.

She added later, however, that prior salary can lead to a cycle of lower pay and disparity. She said that prior pay cannot cause the disparity.

If prior salary is relied upon, she said, “How would they ever get caught up? That's the problem. Once you consider it, you end up in a box.”

 

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