The U.S. Court of Appeals for the Ninth Circuit dealt a setback to gender pay equity with its recent decision in Rizo v. Yovino, No. 16-15372 (9^th Cir. April 27, 2017). In Rizo, the court held that previous salary alone can be “a factor other than sex” for purposes of the Equal Pay Act. As a result, workplace gender gaps are permissible even if the gap is solely caused by employees’ pay at previous jobs.

Under the Equal Pay Act, 29 U.S.C. § 206(d), employers must pay men and women the same wages for equal or comparable work. However, a gender-based pay gap is permissible if, among other exceptions, it is based on a factor other than sex.

Equal-pay advocates argue that pay schemes based on prior salary as a factor other than sex perpetuate past gender inequities and leave women continuing to earn less than men for comparable work. But courts have often taken a different view.

In the 1982 case Kouba v. Allstate Insurance Co., the Ninth Circuit Court of Appeals held that prior salary can be “a factor other than sex” for purposes of the Equal Pay Act if the employer affirmatively proves that its use of the prior salary “‘effectuates some business policy’ and the is reasonable ‘in light of its stated purpose as well as its other practices.’”

The defendant in Rizo, a school district in Fresno, California, set new hires’ pay using a formula based solely on their previous salaries (with an additional stipend for advanced education like a master’s degree). The plaintiff, a teacher in the district, sued after discovering during a lunchtime conversation that she was being paid less than a male teacher with identical experience and education. Because the male teacher had earned a higher salary at his previous job than the plaintiff had at hers, he was able to start at the district at a higher pay level.

The district acknowledged that it had paid Rizo less than her male counterpart but argued the disparity was based on the employees’ prior salaries and therefore permissible under the Ninth Circuit’s decision in Kouba. The plaintiff argued that using prior salary alone perpetuated past sex discrimination in violation of the Equal Pay Act. Moreover, she argued that Kouba did not apply because while the court had held that prior salary could be “a factor other than sex,” it had never explicitly stated that a pay scheme based exclusively on prior salary would pass muster.

The trial court agreed with the plaintiff, holding that “a pay structure based exclusively on prior wages is so inherently fraught with the risk . . . that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose.”

But on appeal, the Ninth Circuit held that the outcome was the same whether the employer used prior salary exclusively or it was merely one factor among many: Even if the prior salary was the only cause of a pay disparity along gender lines, using it still permissible under Kouba. The Ninth Circuit sent the case back to the trial court to determine whether the school district’s use of prior salary effectuated one or more business policies and that it used prior salary reasonably in light of those policies.

The result in Rizo was unsurprising given existing case law—but that doesn’t make it right. Here are three important reasons among many that it’s wrong to allow prior salary to justify women earning less than men for doing the same job:

1. Women are more likely to interrupt their careers to care for children than men. They miss out on raises and higher-paying leadership opportunities. Accordingly, when woman do re-enter the workforce, they do so at a lower salary level than their male counterparts. But if they’re doing equal or comparable work, it’s only right that they receive the same pay, and the Equal Pay Act should protect that interest.
2. A woman who suffers discrimination in her first job can have her income limited for her entire career. Young women may undervalue their contributions and be afraid to speak up for themselves. If a woman underpaid at her first job, she’ll be at a disadvantage in all subsequent jobs that base their pay on prior salary. In effect she’ll be set up for a lifetime of lower salaries sanctioned by the law.
3. It allows employers to profit from the historic discrimination women have suffered and dooms an entire generation of women to lower pay for the same work.

We will continue to monitor Equal Pay Act case law and fight for women who suffer sex discrimination in their workplaces.