Why A Western Court’s Ruling On Gender Pay Discrimination Matters To Florida Business
The 9th Circuit Court takes a strong stance on gender pay equality – with potentially far-reaching consequences
Calling it “an embarrassing reality of our economy,” the Ninth Circuit Court of Appeals ruled this spring that companies can’t pay women less than men for performing the same job – regardless of their salary history.
The ruling marks a major about-face for the Ninth Circuit in its interpretation of the Equal Pay Act. And many also believe it represents a fundamental shift taking place across the country that businesses outside the Circuit can’t afford to ignore – fueled by a rising number of equal-pay claims, and the #MeToo and #TimesUp movements shining the spotlight on alleged abuses against women in the workplace.
In his majority opinion, Judge Stephen Reinhardt – who passed away shortly after issuing the ruling on behalf of a unanimous court – asserted that past wages could reflect historical wage gender discrimination. Allowing employers to use them to pay a woman less than a man, he said, perpetuates the gender wage gap and gives employers a way to sidestep the Equal Pay Act through underhanded tactics.
Women in the U.S. were paid around 80 cents for every dollar their male counterparts received in 2016 – generally translating to more than $400,000 in lost earnings over a 40-year career, reports the National Women’s Law Center (NWLC). For women of color, the gap gapes even wider: with Latina women making less than over $1.05 million and black women making less than over $867,000 throughout their careers.
Evaluating claims of gender pay discrimination
In the Ninth Circuit’s case – Rizo v. Yovino – Aileen Rizo, a math consultant for the Fresno County Office of Education, sued the superintendent of her school district in 2012 after discovering that men hired after she was earning a higher salary for essentially the same job. Lawyers representing the district conceded Rizo was paid less than male employees for the same work but said it wasn’t a violation of the Equal Pay Act because the previous salary counted as a “factor other than sex” for determining wages – an exemption the act permits.
But Reinhardt blasted the practice of using the previous salary to determine pay as “contrary to the text and history of the Equal Pay Act,” saying it “would vitiate the very purpose for which the Act stands.” In his opinion, prohibiting the consideration of past salaries goes a long way toward breaking the cycle of this form of gender discrimination in the workplace.
The Ninth Circuit’s landmark ruling directly affects workers who live in the nine western states that comprise its jurisdiction. It effectively overturns a decision by a three-judge panel of the same court last year that sided with the Fresno district, which left salaries from previous jobs as fair game in determining someone’s pay.
Since its ruling in Kouba v. Allstate Insurance Company more than three decades ago, the Ninth Circuit has consistently maintained that using prior salaries to determine pay does not violate the Equal Pay Act. In that case, an Allstate agent in Sacramento banded with her female colleagues to sue the company for allegedly discriminating against women by basing their wages on their last salary. Lola Kouba claimed that Allstate paid her about $200 a month less than male colleagues doing the same job.
Like all appellate court rulings, the Ninth Circuit’s new decision creates a binding precedent for all federal judges in its jurisdiction, one that will spur them to rule the same way in similar cases.
By asserting that previous salary should never be used as a factor for paying women less, the Ninth Circuit judges took a stronger stand than similar rulings from the Tenth and Eleventh Circuits, which banned the business from using salary history as the only reason for paying a woman less. Florida is part of the Eleventh Circuit.
Florida has the smallest gender wage gap in the nation
Florida has the smallest gender wage gap in the nation, with women in the state making less than $219,000 over a 40-year career – a little more than half the national average, according to the NWLC. But that doesn’t mean Florida businesses shouldn’t pay attention to the Ninth Circuit’s ruling.
Pay equality is a hot topic – and the ruling sets a precedent that may have far-reaching consequences.
The Ninth Circuit bolstered the position of women’s rights advocates who are pushing lawmakers to ban employers from asking job candidates about their salary history. In Florida, the legislature let pay equity bills aimed at strengthening the state’s weak existing law die in committee in 2017 and 2018. Florida’s current law does not prohibit employers from seeking salary information.
But a trend toward laws banning employers from seeking salary histories is gaining momentum in states and cities nationwide, with new regulations in Connecticut, Massachusetts, Oregon, California, New York City, Boston, New Orleans, Philadelphia, and more.
The Ninth Circuit’s ruling will also make it harder for employers in the western region – which houses many Silicon Valley giants – to block gender pay discrimination lawsuits. A major gender-pay class action targeting Google is currently underway in the courts.
And the decision – coupled with greater public awareness, the new state and city laws, and multi-million dollar settlements that have already occurred – is fueling a rising number of pay-equity claims nationally, putting company policies on the hot seat and creating challenges for compliance.
Equal-pay cases are single-plaintiff and class actions, and they are often coupled with allegations of discrimination, sexual harassment, and wrongful termination. Unlike most discrimination actions, Equal Pay Act claims are intent-neutral; meaning it doesn’t matter whether you meant to pay an employee less because of gender, it only matters that you did.
Once the disparity is established, it’s up to the employer to prove that the reason was a legitimate one, based on factors like seniority, a merit system, or quantity or quality of output.
The reputational damage that’s likely to occur if a company is labeled as discriminatory toward women is also negative, potentially resulting in lost business and difficulty recruiting or retaining top talent.
How to protect your business from claims
The current climate makes it more important than ever for companies to take steps to ensure that gender pay discrimination is not occurring in their workplaces. Carefully update your hiring policies and train your managers on how to make sure employment decisions are based on non-discriminatory criteria. Your employee handbook should also include a clear policy prohibiting wage discrimination based on gender, race, national origin, and other protected classes.
Keep detailed wage records – and review job descriptions, pay practices, and compensation policies on a regular basis to ensure that gender discrimination is not happening. Be sure to keep clear and complete records on every employment decision you make that documents how the decision was made and what factors were considered.
Finally, conduct regular employee evaluations that clearly communicate your expectations and whether they are being met by your employee. These evaluations may offer protection in the event of a lawsuit by enabling you to show a legitimate business purpose for actions the employee may have perceived as being discriminatory.
The recent gender pay discrimination ruling by the Ninth Circuit Court may only directly affect businesses in its jurisdiction, but it sets a precedent that can impact businesses nationwide. Accusations of gender pay discrimination can be very harmful to a company, causing damage to reputation and the bottom line. An experienced labor and employment attorney can help Florida companies make sure they are doing everything reasonably possible to treat their employees fairly and reduce their risk of a lawsuit.
Labor and employment comprise an integral part of our business practice at the law firm of Padula Bennardo Levine, LLP. Contact our experienced attorneys today for a consultation.