The federal Ninth Circuit Court of Appeals recently held that unequal pay between men and women is lawful when the difference in pay is based on salary history and not gender.

The plaintiff in Rizo v. Yovino was a female consultant working for the County of Fresno who discovered that men working the same job as her were being paid considerably more than her. The County employer explained to her that the pay disparity was based on the salaries earned by those employees at their most recent jobs. The employee filed suit, claiming that the pay disparity was discriminatory and violated the federal Equal Pay Act.

The plaintiff and the EEOC argued to the court that prior salary alone cannot be a factor in setting disparate pay because when an employer determines compensation by considering only its employees’ prior salaries, it perpetuates existing pay disparities and thus undermines the purpose of the Equal Pay Act. The Ninth Circuit court disagreed, holding that an employer may base a pay differential on prior salary, so long as it showed that its use of prior salary effectuated some business policy and that the employer used the factor reasonably in light of its stated purpose and its other practices.