Is Prior Salary a Factor Other Than Sex?: an Approach to Resolve the Ongoing Debate

• Publication year: 2021

98 Nebraska L. Rev. 996. Is Prior Salary a Factor Other Than Sex?: An Approach to Resolve the Ongoing Debate

Is Prior Salary a Factor Other Than Sex?: An Approach to Resolve the Ongoing Debate

Note(fn*)

I. Introduction .......................................... 996

II. Background ........................................... 999
A. The Equal Pay Act of 1963 ........................ 999
1. The Act's Four Exceptions ..................... 1000
B. Supreme Court Interpretation of the Equal Pay Act ............................................... 1002
1. Corning Glass Works v. Brennan ............... 1003
2. Washington County v. Gunther ................. 1004

III. Rizo v. Yovino ........................................ 1005
A. Background ....................................... 1006
B. Majority Opinion .................................. 1007
C. Concurring Opinions .............................. 1010
D. Certiorari and Supreme Court Opinion ............ 1013
E. Circuit Split ....................................... 1013

IV. Analysis .............................................. 1016
A. Employers Face Uncertainty in Light of Rizo ....... 1017
B. Courts Should Adopt the Middle-Ground Approach . 1019 V. Conclusion ............................................ 1025

I. INTRODUCTION

Amy and Jack work as financial advisors at a national firm. They both attended the University of Nebraska-Lincoln, graduated in 2000, and earned a master's degree while working. Their qualifications and duties are the same, but Jack's yearly salary is $100,000 while Amy earns only $80,000. Amy is not alone. In the United States, on aver-

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age, median earnings of full-time women working year-round are only 80% of men's earnings.(fn1) Despite explicit prohibition of gender wage discrimination with the passage of the Equal Pay Act(fn2) (the Act) and Title VII of the Civil Rights Act(fn3) (Title VII) in the early 1960s, the wage gap(fn4) has persisted and affects most working women in America across ages, races, states, minority statuses, and education levels.(fn5) The current rate of progress in closing the gap is slow and experts do not expect women to reach pay equity until 2059.(fn6) Although the wage gap has narrowed over the past century, its persistence, combined with Congress's lack of progress in eliminating pay inequality, indicates deficiencies in the law.

In 1963, Congress enacted the Act to end wage discrimination based on sex and promote the principle of equal pay for equal work.(fn7) In the 1980s-years after the Act's passage-gender wage discrimination began to consistently decrease. Improvement in narrowing the wage gap stalled again in 2000 and has since stagnated.(fn8) The persistent gap is attributable not only to overt gender discrimination, but also to non-discriminatory factors, including differences in experience

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and occupational segregation into lower-paying jobs.(fn9) Additionally, a complex combination of implicit and explicit biases against women-including undervaluation of work historically done by women, women's perceived and actual behavior in negotiations, and working mothers' perceived role as a caretaker-have contributed to the gender wage gap in less obvious ways.(fn10) The Act simply fails to address these factors that are not overtly discriminatory. Moreover, it fails to recognize and account for implicit bias and other contributors to the wage gap that fall outside the Act's narrow focus of pay differences between men and women doing almost identical work. Thus, the Act is largely ineffective today and the twenty-year stall in progress toward pay equity begs either for federal legislation amending the Act or clearer judicial guidance for its interpretation.

A seemingly subtle but significant factor that may affect Amy's pay is prior salary. When Amy and Jack interviewed for their current positions, their employer asked what their last jobs paid. Because women have historically been paid less than men, Amy can argue her employer's reliance on her prior pay to set her current salary is discriminatory. The employer would respond that prior salary information is a "factor other than sex"-an exception to the Act(fn11) -and does not violate the law. Depending on the jurisdiction and the extent to which the employer relied on Amy's prior salary to set her current pay at $80,000 compared to Jack's $100,000, Amy may prevail.

This Note examines the uncertainty of the Act's "factor other than sex" exception. It does so through the lens of the most prominent case in this area, Rizo v. Yovino,(fn12) in which an employer based an employee's starting salary solely upon her prior pay. Part II discusses the Act, its exceptions, and how the Supreme Court has interpreted it. Part III examines the majority and concurring opinions in Rizo and their key differences, as well as the circuit split the decision deepened. Part IV explains how Rizo has led to uncertainty and left employers questioning whether they may consider an employee's prior salary when determining pay. It argues that a middle-ground approach is the best way to interpret the law. Finally, Part V concludes that courts should adopt the middle-ground approach to avoid pitfalls of a categorical rule and end the perpetuation of the wage gap based upon use of prior salary. This proposed approach will allow women to take charge of salary negotiations without systemic discrimination while granting employers flexibility to conduct business.

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II. BACKGROUND

A. The Equal Pay Act of 1963

Congress enacted the Act in 1963 to end wage discrimination on the basis of sex.(fn13) The Act sought to promote an equal-pay-for-equal-work mantra through a simple purpose: to prohibit employers from paying men more than women for equal work.(fn14) The Act was adopted as a solution to the "serious and endemic problem of employment discrimination in private industry"(fn15) that was based on the outdated tradition of men being paid more than women. In Corning Glass Works v. Brennan,(fn16) the Supreme Court articulated the Act's purpose by explaining that Congress sought to remedy "the fact that the wage structure of 'many segments of American industry has been based on an ancient but outmoded belief that a man, because of his role in society, should be paid more than a woman even though his duties are the same.'"(fn17) Therefore, the Act prohibits wage discrimination between employees based on sex for equal work requiring equal skill, effort, and responsibility and performed under similar working conditions.(fn18) Overall, the Act serves a "broadly remedial" purpose to prohibit wage discrimination on the basis of sex.(fn19)

In Corning, the Court explained that Congress recognized the concept of equal pay for equal work, but that discussion was not reflected in a single piece of legislation that employers could understand and

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use to govern themselves.(fn20) By reducing this concept to statute, Congress intended to prohibit wage discrimination on the basis of sex and set clear rules for the private sector. To establish a cause of action, an employee bringing a wage discrimination claim under the Act must show that the employer pays different wages to employees of opposite sexes for equal work where the jobs require equal skill, equal effort, equal responsibility, and are performed under similar working conditions.(fn21)

1. The Act's Four Exceptions

The first section of the Act describes four affirmative defenses, or exceptions, that allow an employer to pay a member of one sex higher wages than a member of another sex even if the employee establishes a cause of action. The Act reads:

[E]xcept where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee.(fn22)

These affirmative defenses authorize an employer to justify paying different wages to members of different sexes when a pay differential otherwise violates the Act on its face.(fn23) In other words, even when male and female employees perform substantially equal work, an employer does not violate the Act when it can prove that a difference in wages is due to a seniority system, merit system, production earnings system based upon quantity or quality, or "a differential based on any other factor other than sex." This might include, for example, certain training programs, education, or the employee's amount of experience.(fn24)

Courts consistently understand and apply the Act's three straight-forward exceptions-a seniority system, a merit system, or a produc-

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tion earnings system. Compensation pursuant to these exceptions relates to concrete characteristics, such as qualifications, performance, or experience.(fn25) Some courts have used the term "bona fide" when analyzing this portion of the Act, determining a pay differential pursuant to these first three exceptions is permissible because the system was not designed to and does not actually discriminate on the basis of sex.(fn26) Overall, these exceptions are narrow and specific, and courts can apply them with reasonable consistency.(fn27)

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