Federal courts still split on employers asking salary history questions

The U.S. Supreme Court’s Feb. 25 decision to remand a federal Equal Pay Act case issued by the 9th U.S. Circuit Court of Appeals because of the death of the judge who wrote it means a circuit court split over the issue of whether employers can ask job candidates about their salary history stands, at least for now.

But many employers are already issuing rules forbidding questions about salary history in response to the growing number of states and other governmental entities that prohibit these queries, experts say.

Justice Stephen Reinhardt died on March 29, 2018, before the April 9, 2018, en banc opinion in Aileen Rizo v. Jim Yovino, Fresno County Superintendent of Schools was issued by the San Francisco-based appeals court.

Ms. Rizo, a math consultant for the Fresno County, California, schools,  charged she was given a starting salary less than a male math consultant who had been hired.

The 9th Circuit’s strongly worded opinion in Ms. Rizo’s favor replaced an April 2017 ruling by a three-judge 9th Circuit panel and affirmed a ruling by the U.S. District Court in Fresno that denied Fresno County summary judgment in the case. The ruling held it is “impermissible to rely on prior salary to set initial wages.”

All 11 judges who heard the case en banc agreed Ms. Rizo should prevail, but five of the judges held it should be on different grounds than those expressed in the majority opinion.

In its unsigned ruling, the Supreme Court said, “By counting Judge Reinhardt’s vote, the court deemed Judge Reinhardt’s opinion to be a majority opinion, which means that it constitutes a precedent that all future Ninth Circuit panels must follow.”

“Without Judge Reinhardt’s vote, the opinion attributed to him would have been approved by only 5 of the 10 members of the en banc panel who were still living when the decision was filed. Although the other five living judges concurred in the judgment, they did so for different reasons. The upshot is that Judge Reinhardt’s vote made a difference.”

The 9th Circuit “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,” said the court, in remanding the case for further proceedings.

Daniel M. Siegel, an attorney with Siegel, Yee & Brunner in Oakland, California, who represented Ms. Rizo in the case, said the ruling “leaves the law somewhat in limbo.”

The 9th Circuit’s options now include simply issuing a new judgment with the 10 remaining living judges, “which would mean the lower court decision is still affirmed, and the 9th Circuit’s previous decision is overturned,” Mr. Siegel said.

“That would mean, at least in terms of our case, we would go forward in federal court in Fresno with Ms. Rizo’s case and take it to trial.”

The other option is to appoint a new judge to replace Judge Reinhardt “and bring the panel back up to 11 judges and decide it again. They could do that with or without further oral argument or written argument, for that matter,” said Mr. Siegel.

The school district’s attorney did not respond to a request for comment.

“The immediate implication here is that (the Rizo ruling) is not currently binding precedent in the 9th Circuit,” said Sherry Culves, a partner with Nelson, Mullins, Riley & Scarborough LLP in Atlanta.

“It’s likely that the 9th Circuit will come out with another decision” in Ms. Rizo’s favor, but “it may or may not be as strong” as Judge Reinhardt’s opinion,” said Susan Gross Sholinsky, a member of law firm Epstein Becker & Green PC in New York.

The 9th Circuit ruling disagrees with several other federal appeals court decisions concerning the Equal Pay Act. In a frequently cited 2005 decision, for instance, the 7th U.S. Circuit Court of Appeals in Chicago held in Wernsing v. Department of Human Services that providing they avoid relying on criteria such as race and sex “employers are free to set their own standards” of acceptable business practices.

Stephanie E. Lewis, Greenville, South Carolina-based co-chair of Jackson Lewis PC’s pay equity resource group, said while it is likely the 9th Circuit will reach the same holding, it is premature to say the Supreme Court will take the case “because we do not know at this point what the new majority opinion’s holding will be.”

The facts in this case are unique and there may be another “that presents a cleaner set of facts,” said Christopher Wilkinson, a partner with Orrick, Herrington & Sutcliffe LLP in Washington.

Meanwhile, even though there is no definitive answer on the issue at the federal court level, state and other entities have addressed the issue, said Allison Sues, a partner with SmithAmundsen LLC in Chicago.

State laws are requiring bona fide, legitimate factors to warrant wage differential, such as skills, experience, performance and education, said Kathleen McLeod Caminiti, a partner with Fisher & Phillips LLP in Murray Hill, New Jersey.

“Definitely, employers have been looking at that issue, and making changes where needed to comply with state law,” said Liz S. Washko, a shareholder with Ogletree, Deakins, Nash, Smoak & Stewart PC in Nashville.

However, referring to the 9th Circuit ruling, Ms. Culves said, “The difference here is that this is the federal Equal Pay Act, with nationwide influence.” 

She said also, “There’s a difference between whether it’s legal and whether it’s right.” 

Ms. Culves said she emphasizes in training that equal opportunity in the workplace “has to include not only the opportunity to get and perform the job but also be paid equally for the job.”