Ninth Circuit Holds that Employers May Use Salary History To Pay Men and Women Differently
Last month the Ninth Circuit held that employers may legally inquire into an employee’s or prospective employee’s salary history and use that information to pay men and women differently for the same work. Despite the Ninth Circuit’s ruling, employers with a practice or policy of inquiring into applicants’ prior salaries should review their policies and local legal landscape carefully: many cities and states have passed laws banning the practice. In fact, the Equal Employment Opportunity Commission and several civil rights groups have even asked the Court to reconsider its ruling.
Inquiries into salary history are believed to perpetuate sex-based income inequality by compounding the effects of disparate salaries for men and women over time. For example, a woman who begins her career making less than a male counterpart would see that diminution reflected in her next job if her new employer is permitted to base her salary on her past income.
Employers often inquire into a job applicant’s prior salary history in order to have a reference point in salary negotiations. Information about an applicant’s prior salary also helps employers make efficient decisions during the hiring process because it signals which candidates are outside the employer’s range. In order to achieve the same ends without the risk of running afoul of Equal-Pay-principles, employers may consider asking about an applicant’s salary expectations or requested salary in lieu of probing about an applicant’s prior salary.