Reversing Kouba v. Allstate Ins. Co. (9th Cir. 1982) 691 F.2d 873, 876, this en banc decision holds that an employer may not justify pay disparities in defense of a claim the disparity violates the Equal Pay Act by showing that the disparity results from differences between the pay the compared employees earned in prior jobs. Here, the employer, Fresno, had a policy of paying new hires 5% more than what they had earned previously with a different employer, the rationale being that doing so encouraged worker to seek employment with Fresno and as an evenly administered policy it avoided any possible favoritism while minimizing the public’s expenditure on salaries. Nevertheless, basing pay differentials on pay earned in prior jobs may continue prior gender pay differentials. The Equal Pay Act’s catchall exception for “any other factor other than sex” upon which a wage differential may be based (29 U.S.C. § 206(d)(1)) is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance, not including pay at a prior job.
Ninth Circuit Court of Appeals (en banc) (Reinhardt, J.; McKeown, Murguia, Callahan, Tallman, JJ., concurring; Watford, J., concurring in the judgment); April 9, 2018; 2018 WL 1702982