Dive Brief:
- The U.S. Court of Appeals for the 9th Circuit has ruled that an employer may use a job candidate’s salary history to set pay, reports SHRM. The decision runs counter to other court rulings, possibly opening the door for the Supreme Court to be the final arbiter of the issue.
- Plaintiff Aileen Rizo, a math consultant for Fresno County, CA, discovered that her male co-workers earned more than her for doing the same work, says SHRM. Rizo subsequently learned that her salary was based on her pay history and later sued her employer under the Equal Pay Act.
- The district court backed Rizo’s claim, stating that using her past salary history could perpetuate pay disparity indefinitely. However, the appeals court overturned the ruling in favor of the employer.
Dive Insight:
The 9th Circuit's decision complicates an issue thought to be settled by earlier court rulings. As more states and municipalities adopt policies that prohibit employers from basing pay on wage histories, will more opponents challenge those laws through the courts?
Wage history isn't the only driver of pay inequities, but it is a potential cause that’s easily addressed. Criteria such as education, work quality or region, which define pay differences, are fair and reasonable. However, job candidates who are transitioning from a nonprofit organization, for example, to a corporate environment where wages tend to be higher on average, should be paid accordingly.
Employers looking to eliminate pay inequities don’t have to wait on the results of each court decision, as more will likely emerge. Instead, they can adopt their own policies and work with managers to ensure pay rates are fair and criteria-based.
Some employers have decided to embrace a more radical pay transparency. Google employees, for example, have taken to posting and comparing their salaries online. In the 'Glassdoor age,' job candidates are more empowered than ever in knowing their market value, making retention in the face of talent wars all the more difficult. Given this reality, recruiters should be rethinking old ways of discussing pay during interviews
