In defending a claim that employees’ pay disparity violates the Equal Pay Act, an employer may justify the disparities by showing that it results from differences between the pay the compared employees earned in prior jobs, so long as the reliance on prior wages effectuates some business policy of the employer and the employer uses evidence of prior wages reasonably.
Reaffirming Kouba v. Allstate Ins. Co. (9th Cir. 1982) 691 F.2d 873, 876, this case holds that an employer may justify pay disparities in defense of a claim the disparity violates the Equal Pay Act by showing that the disparity results from differences between the pay the compared employees earned in prior jobs so long as the reliance on prior wages effectuates some business policy of the employer and the employer uses prior wages reasonably in light of that stated purpose and the employer’s other practices. Here, the employer, Fresno, had a policy of paying new hires 5% more than what they had earned previously with a different employer, the rationale being that doing so encouraged worker to seek employment with Fresno and as an evenly administered policy it avoided any possible favoritism while minimizing the public’s expenditure on salaries. This could justify the disparity in pay between the female plaintiff and her male co-workers, although they were otherwise similarly situated. The case is remanded to the district court to reconsider Fresno’s summary judgment motion in light of the proper legal rule.
Ninth Circuit Court of Appeals (Ademan, J., sitting by designation); April 27, 2017; 2017 WL 1505068