Q: I HAVE been working at this company for 4 years and in my industry for 15 years. I just found out that a newly-hired male co-worker who is doing work similar to mine is being paid the same amount of wages as I am. This new hire has been working in the industry for about 3 years. I have more experience, education, and seniority in the company but my current pay seems to be equal to that of a new hire. I asked HR about this, and I was told that my starting salary was based on my salary from my previous job plus an increase of 4%. When I asked if my education and experience were considered in the salary decision, HR did not answer. Is this right?
A: Employers routinely use prior salary as the starting point of a newly-hired employee’s starting salary. However, using prior salary as the only factor in setting a new employee’s pay may lead to discriminatory practice. Courts have recognized that considering prior salary as one factor in setting wages is not prohibited by law, as long as the policy is applied reasonably. Some courts acknowledge that there is a risk that an employer might manipulate its use of prior salary to underpay female employees. Consider the following case filed by a California employee:
Aileen Rizo works as a math teacher and consultant at Fresno County Superintendent of Schools. During her third year on the job, she learned that a newly-hired male math teacher/consultant had started at a much higher salary. Rizo started at Step 1 on the management salary schedule. The new hire started at Step 9. Two other male teacher/consultants both started at Step 7.
Rizo attempted to work out the pay disparity with human resources, but was not successful and her pay schedule was not changed. Rizo then filed a lawsuit, alleging that the employer violated the federal Equal Pay Act (“EPA”) and laws on sex discrimination.
The employer asked the court to throw out the case, arguing that Rizo’s starting salary was based on the application of a neutral management policy. The policy sets the new employee’s starting salary based only on his or her prior salary. The employer claimed that this policy is objective and gender- neutral. However, Rizo argues that an employer’s reliance only on prior salary in setting starting salaries is prohibited by law.
The court ultimately decided in favor of Rizo and refused to throw out the case. The court officially noted that there are federal statistics confirming the pay gap between male and female teachers nationwide. Even if the employer’s salary policy was created for a non-discriminatory purpose, the policy still conflicts with the Equal Pay Act.
A pay structure based only on prior wages will continue the wage disparity that discriminates against women, even if the pay structure is motivated by a legitimate business purpose. Because across-the- board pay disparity between male and female educators exists nationwide, hiring salary plans similar to that of Fresno’s, which do not look beyond prior salary, will perpetuate that disparity. This will go against Congress’ intent to right the traditionally unequal salaries paid to women for equal work.
As a result of the court’s denial to throw out the case, Rizo is given the chance to have her case heard by a jury instead.
If prior salary is taken into account as part of the employee’s starting wage, the employee may want to check whether other factors, such as years of experience or educational attainment, are also considered by the employer. If only prior salary is considered, and this system appears to have a negative impact, resulting in female workers being paid less than their male counterparts, then pay discrimination may exist. Employees who experience this are well-advised to consult with an experienced employment attorney to protect themselves.
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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant recoveries for thousands of employees and consumers. He is named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a member of the Million Dollar-Advocates Forum.