US Supreme Court Strikes Down Pay Equity Case

by Harry I. Price

A landmark ruling was overturned due to ruling being issued following death of an appellate jurist deemed to be the “swing vote.”

The Supreme Court took the unusual step this week of vacating a 2018 federal appeals court decision because one of the judges counted in the majority was deceased by the time the decision was published.  The ruling that was vacated dealt with pay equity: a landmark decision that concluded employers could not justify wage differentials between men and women by relying on prior salary. Although the justices did not examine the merits of the 9th Circuit’s Yovino v. Rizo ruling in their unsigned five-page opinion, their decision places employers back into a state of uncertainty regarding a controversial pay equity practice.

Employee Paid Less Than Others Solely Because Of Salary History

The facts of the case are straightforward. A female employee (Rizo) was hired as a math consultant by the Fresno County Office of Education in 2009. The county’s Standard Operating Procedure for determining salary dictated that new employees would be given a 5 percent raise from whatever their salaries had been at their previous job and then placed into a structured salary schedule. Rizo was earning a little over $50,000 at her previous post in Arizona before joining Fresno County, so she was slotted into the appropriate rung on the salary ladder as dictated solely by that previous salary. The county did not take prior experience or any other factors into account when setting Rizo’s salary.

A few years later, Rizo learned that male colleagues subsequently hired in similar roles had been placed into higher salary steps - presumably because their salaries at previous employers had been higher than her previous salary. An internal complaint did not resolve the matter to her satisfaction, so she filed an Equal Pay Act (EPA) claim against the county in 2014.

Employee Eventually Earns Win In Court

After winning a favorable ruling from a lower federal court which would have allowed her case to proceed to trial, a three-judge appellate panel of the 9th Circuit Court of Appeals reversed that decision and ruled in the county’s favor. Because this matter was deemed sufficiently significant, however, the 9th Circuit heard the matter en banc—meaning a full complement of 11 judges ruled on the matter, setting controlling law for all employers in its jurisdiction (which includes those in California, Washington, Nevada, Arizona, Oregon, Alaska, Hawaii, Idaho, and Montana).

The 9th Circuit’s en banc panel made history by becoming the first federal appeals court to explicitly reject the employer’s contention that salary history could serve as a legitimate justification for a pay disparity under the EPA. The employer had relied on the catchall provision of the statute that reads:

No employer…shall discriminate…between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except 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.

Because salary history is, technically, a factor “other than sex,” the employer argued that it should be permitted to use it to justify any disparity. The 9th Circuit panel rejected the employer’s argument, ruling that using prior salary to justify a wage differential would allow employers to capitalize on the persistence of historic wage gaps and perpetuate that gap ad infinitum – which “would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands.”

Judge’s Untimely Death Taints Ruling

The county appealed to the Supreme Court to examine the ruling.  The Court not only granted the county’s request to hear the case, but also issued a per curiam (unsigned) opinion striking down the 9th Circuit’s decision. The reason for its ruling, however, had nothing to do with the merits of the case; the brief decision mentions nothing about pay equity at all. Instead, the reasoning behind the decision stems from the fact that one of the 9th Circuit judges listed in the majority of the en banc ruling died 11 days before the case was issued.

The 9th Circuit decision had been a six to five majority opinion, and all six judges had crafted several alternate opinions concurring with the final outcome but expressing differing opinions as to how they would get there.  As a result, since a judge may change his or her mind up to the very moment a decision is released, meaning that a decision is truly not “final” until it is actually published, the Supreme Court said that the lower court decision was not effective.  Their explanation:  counting the deceased judge as a member of the majority for not proper. “That practice,” it said, “effectively allowed a deceased judge to exercise the judicial power of the United States after his death. But federal judges are appointed for life, not for eternity.”

What’s Next?

The 9th Circuit Court decision has been vacated and sent back for further proceedings. It is extremely likely that the appeals court will once again assemble an en banc panel to review the case and issue another opinion.  While Rizo may still win, the question, however, is what standard the majority of judges will set regarding the EPA’s catchall provision, and how employers in the 9th Circuit’s jurisdiction will be able to treat salary history when setting compensation.

To Ask Or Not To Ask: That Is The Question

What are the expectations of employers?  In light of this controversy, employers must determine whether they should eliminate questions about salary history during the application process and during compensation finalization. While California and Oregon both have state laws barring employers from making such inquiries and using past salary history to establish compensation, employers in other states are wondering what to do?

Differences in experience, education, ability, job performance, seniority, quality of work, quantity, or other merit-based factors are not impacted by today’s decision.  Whichever way you look at it, today’s ruling provides yet another reminder that the specter of pay equity claims is a serious issue.  That is why many employers have eliminated questions relating to salary history from their interview protocol and job applications. Instead, many employers now request an applicant’s salary expectations at this stage in the process as a way to help negotiate a fair salary.  Others may have different opinions on how best to handle the issue, but now one thing is certain:  the opinions issued by appellate judges after they are deceased carry no weight.