Table of Contents

Table of Authorities.................................................................................................................. ii

Statement of Interest............................................................................................................... 1

Statement of the Issue............................................................................................................. 2

Statement of the Case............................................................................................................. 2

Argument................................................................................................................................... 4

A. Rehearing is appropriate because the panel decision

endorses a practice that perpetuates the gender pay gap....................................... 5

B. Rehearing is appropriate because the panel decision conflicts

with authoritative decisions of the Tenth and Eleventh Circuits. ..................... 11

Conclusion................................................................................................................................ 13

Certificate of Compliance

Certificate of Service

Table of Authorities

Cases Page(s)

Aldrich v. Randolph Central School District,

963 F.2d 520 (2d Cir. 1992)............................................................................................... 12

Angove v. Williams-Sonoma, Inc.,

70 F. App’x 500 (10th Cir. 2003) (unpub.)......................................................... 4, 6, 11

Beck-Wilson v. Principi,

441 F.3d 353 (6th Cir. 2006)........................................................................................... 12

Corning Glass Works v. Brennan,

417 U.S. 188 (1974)..................................................................................................... 5-6, 7

Drum v. Leeson Electric Corp.,

565 F.3d 1071 (8th Cir. 2009).......................................................................................... 7

EEOC v. J.C. Penney Co.,

843 F.2d 249 (6th Cir. 1988)............................................................................................. 12

Faust v. Hilton Hotels Corp., No. 88-2640,

1990 WL 120615 (E.D. La. Aug. 13, 1990)................................................................... 10

Glenn v. General Motors Corp.,

841 F.2d 1567 (11th Cir. 1988)............................................................................ 7, 11-12

Irby v. Bittick,

44 F.3d 949 (11th Cir. 1995)............................................................................ 4, 6, 10-11

Kouba v. Allstate Insurance Co.,

691 F.2d 873 (9th Cir. 1982)................................................................................... passim

Maxwell v. City of Tucson,

803 F.2d 444 (9th Cir. 1986)............................................................................................ 6

Price v. Lockheed Space Operations Co.,

856 F.2d 1503 (11th Cir. 1988)................................................................................. 10-11

Riser v. QEP Energy,

776 F.3d 1191 (10th Cir. 2015)................................................................................. 6, 11

Siler-Khodr v. University of Texas Health Science Center,

261 F.3d 542 (5th Cir. 2001)............................................................................................ 7

Wernsing v. Illinois Department of Human Services,

427 F.3d 466 (7th Cir. 2005)........................................................................................... 12

Statutes and Rules

Equal Pay Act of 1963,

29 U.S.C. § 206(d)(1)................................................................................................ passim

29 U.S.C. § 206(d)(1)(iv).......................................................................................... passim

Federal Rule of Appellate Procedure 29(b)......................................................................... 1

Federal Rule of Appellate Procedure 35(b)(1)(B)............................................................. 11

Ninth Circuit Rule 29-2(a)...................................................................................................... 1

Ninth Circuit Rule 35-1......................................................................................................... 11

Other Authority

EEOC Compliance Manual, Compensation Discrimination (Dec. 2, 2000)

available at https://www.eeoc.gov/policy/docs/compensation.html .......... 7-8, 10

Bureau of Labor Statistics, Labor Force Statistics from the

Current Population Survey, Household Data Annual Averages,

Median weekly earnings of full-time wage & salary workers

by detailed occupation & sex: Education, training, & library occupations (2016),

available at http://www.bls.gov/cps/cpsaat39.pdf

(last modified Feb. 8, 2017)............................................................................................... 9

IWPR, The Gender Wage Gap by Occupation 2015 &

By Race & Ethnicity tbl. 1, available at

http://www.iwpr.org/publications/pubs/the-gender-wage-gap-by-occupation-2015

(last visited Oct. 4, 2016).................................................................................................. 9

AFL-CIO, Dep’t for Professional Employees, Fact Sheet 2010,

Professional Women: Vital Statistics, at 3 (2010), available at

https://www.pay-equity.org/PDFs/ProfWomen.pdf

(last visited May 17, 2017)............................................................................................ 9-10

AAUW: The Simple Truth about the Gender Pay Gap (Fall 2016), available at

http://www.aauw.org/files/2016/09/the-simple-truth-figure-2-v2.jpg

(last visited Oct. 4, 2016)................................................................................................. 10

No. 16-15372

______________

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

________________________

AILEEN RIZO,

Plaintiff-Appellee,

JIM YOVINO,

Defendant-Appellant.

______________________________________

On Appeal from the United States District Court

for the Eastern District of California

The Honorable Michael J. Seng, U.S. Magistrate Judge

Civ. No. 14-cv-4932 (AWI-MJS)

______________________________________

BRIEF OF THE U.S. EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION AS AMICUS CURIAE

IN SUPPORT OF REHEARING EN BANC

_______________________________________________________

Statement of Interest

The U.S. Equal Employment Opportunity Commission is charged with interpreting and enforcing the Equal Pay Act, 29 U.S.C. § 206(d)(1) (“EPA”), along with other federal employment discrimination statutes. The Commission is authorized to participate as amicus curiae in support of rehearing and rehearing en banc. Fed. R. App. P. 29(b); Circuit Rule 29-2(a).

The plaintiff is seeking review of an important question — whether an employer may avoid EPA liability for paying a woman less than a man for the same work by proving that it based starting pay exclusively on employees’ most recent prior pay, regardless of experience or other qualifications. The Commission, along with two circuit courts, takes the position that prior pay cannot be the sole factor causing the disparity because the practice perpetuates the gender pay gap that continues to exist nationally, in the field of education and elsewhere. Resolution of this question will materially affect the Commission’s enforcement efforts. Accordingly, the Commission participated as amicus curiae before the panel. We now offer our views in support of rehearing and en banc review.

Statement of the Issue

Does the EPA permit employers to base starting pay exclusively on employees’ most recent prior pay where the practice causes a pay disparity?

Statement of the Case

Aileen Rizo was hired as a math consultant with the Fresno County Schools (“County”) in 2009. Despite her two Master’s degrees and years of relevant experience, the County set her pay at the bottom of its multi-level, multi-step pay scale, Step 1, Level 1. She alleges that she was assured her pay was comparable to someone with as much experience as she had. She later learned, however, that her male colleagues had been placed at Steps 7 or 9, regardless of their experience, and so were earning thousands of dollars more than she was for doing exactly the same work. The County explained that in setting starting pay, pursuant to its internal policy, SOP 1440, the County determines the appropriate step on the pay scale based solely on the employee’s most recent prior pay. Factors such as experience — which the County had previously used to determine starting pay — and even the kind of work the employee had been doing were not considered.[1] Slip op. at 4-5.

Dissatisfied, Rizo sued. In moving for summary judgment, the County conceded that Rizo had established a prima facie case under the Equal Pay Act since she was paid less than similarly-situated male employees doing the same work. The case therefore turned on whether the County could prove that its practice satisfied one of the EPA’s affirmative defenses, here, the “factor other than sex.” To carry that burden, the County acknowledged its practice of basing starting pay solely on the individual’s most recent prior pay. The County then listed four reasons for this practice: it is objective; it prevents favoritism and ensures consistency of application; it is a judicious use of taxpayer money; and it encourages new employees to come work for the County because they always get a bump in pay. Slip op. at 8. The County denies that the practice was intended to attract better qualified candidates. Def. Reply at 4 n.1.

The district court denied summary judgment. Noting disagreement among the circuits, the court agreed with the Tenth and Eleventh Circuits that prior pay can be considered along with other factors, such as experience or education, in determining starting pay, but “an employer’s EPA defense may not be based solely on prior salary.” 2015 WL 9260587, at *8 (citing, e.g., Irby v. Bittick, 44 F.3d 949, 954 (11th Cir. 1995); Angove v. Williams-Sonoma, 70 F. App’x 500, 508 (10th Cir. 2003)). The court reasoned that record evidence reflected an “across-the-board pay disparity between male and female educators nationwide,” and “[l]ateral hiring salary plans [like the County’s] will perpetuate that disparity.” Id. at *9.

The panel reversed, concluding that the case was “controlled” by Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982), which held that the EPA “does not impose a strict prohibition against the use of prior salary.” Slip op. at 4. According to the panel, an employer may “maintain a pay differential based on prior salary” if the employer “show[s] that the factor ‘effectuate[s] some business policy’ and that the employer ‘use[s] the factor reasonably in light of the employer’s stated purpose as well as its other practices.’” Id. at 8 (citing Kouba, 691 F.2d at 876-77). On remand, the panel stated, the court should evaluate whether the County could make the requisite showing. Id. at 11.

Argument

The question presented is whether prior pay alone can be considered “any other factor other than sex” within the meaning of the EPA where it causes a gender-based disparity in pay. The Commission takes the position that it cannot and had argued that Kouba could be read consistently with that position. However, insofar as this Court agrees with the panel that Kouba in fact permits employers like the County to base starting pay on prior pay alone as long as the employer proves that its reliance on that factor effectuates some business policy and the employer uses the factor reasonably in light of its stated purposes as well as its other practices, the Court should consider the issue en banc and hold that sole reliance on prior pay is impermissible.

A practice like the County’s undermines the purposes of the EPA because it institutionalizes the gender pay gap that studies confirm continues to exist and relies on the largely discredited market forces theory, which endorses paying women less than men because they will agree to work for less. Further, the panel decision cannot be reconciled with “authoritative decisions” of the Tenth and Eleventh Circuits. This Court should join those circuits in holding that prior salary alone cannot be a “factor other than sex” such that employers like the County can pay women like Rizo thousands of dollars less than their male colleagues for doing exactly same work.

A. Rehearing is appropriate because the panel decision endorses a practice that perpetuates the gender pay gap.

When Congress passed the Equal Pay Act in 1963, its goal was to remedy what Congress viewed as a “serious and endemic problem”: the fact that women were being paid less than men for doing the same work. Corning Glass Works v. Brennan, 417 U.S. 188, 195 (1974) (citing legislative history). The solution Congress adopted was “quite simple in principle.” It required “that ‘equal work will be rewarded by equal wages.’’’ Id. (internal citation omitted). The statute is “broadly remedial,” and “should be construed and applied so as to fulfill the underlying purposes which Congress sought to achieve.” Id. at 208. Accordingly, once a plaintiff proves that she is paid less than similarly-situated men for substantially equal work, she is normally entitled to relief unless the employer proves one (or more) of the four statutory affirmative defenses. Maxwell v. City of Tucson, 803 F.2d 444, 445-46 (9th Cir. 1986).

At issue here is the fourth affirmative defense: “a differential based on any other factor other than sex.” 29 U.S.C. § 206(d)(1)(iv). The County asserts that it bases starting pay solely on employees’ most recent prior pay; according to the County, prior pay constitutes a factor other than sex even though it causes a disparity. Several circuits as well as the Commission disagree. The Tenth and Eleventh Circuits have held categorically that while there is no prohibition against relying on multiple factors including prior pay, prior pay alone cannot be considered a “factor other than sex” within the meaning of the EPA. See, e.g., Riser v. QEP Energy, 776 F.3d 1191, 1199 (10th Cir. 2015) (citing Angove, 70 F. App’x at 508); Irby, 44 F.3d at 955 (stating that “prior salary alone cannot justify pay disparity”). They reason that “if prior salary alone were a justification, the exception would swallow up the rule and inequality in pay among genders would be perpetuated.” Irby, 44 F.3d at 955.

Courts similarly reject the related “market forces theory,” discredited by Corning Glass (417 U.S. at 205) — that an employer must offer more money to male applicants because they will not accept less but, conversely, may offer less money to female applicants because they will accept less. The Eleventh Circuit explained, “[T]he argument that supply and demand dictates that women qua women may be paid less is exactly the kind of evil that the [Equal Pay] Act was designed to eliminate, and has been rejected.” Glenn v. Gen’l Motors Corp., 841 F.2d 1567, 1570 (11th Cir. 1988) (citations omitted). See also Siler-Khodr v. Univ. of Tex. Health Sci. Ctr., 261 F.3d 542, 549 (5th Cir. 2001) (argument “is not tenable and simply perpetuates the discrimination that Congress wanted to alleviate when it enacted the EPA”); cf. Drum v. Leeson Elec. Corp., 565 F.3d 1071, 1073 (8th Cir. 2009) (employer may “not rely on the prohibited ‘market force theory’ to justify lower wages for female employees simply because the market might bear such wages”).

The Commission agrees. In our view, an employer may consider prior salary as part of a mix of factors — as, for example, where the employer also considers education and experience and concludes that the employee’s prior salary accurately reflects ability, based on job-related qualifications. But because “prior salaries of job candidates can reflect sex-based compensation discrimination,” “[p]rior salary cannot, by itself, justify a compensation disparity.” EEOC Compliance Manual, Compensation Discrimination § 10-IV.F.2.g (Dec. 5, 2000), available at https://www.eeoc.gov/policy/docs/compensation.html. Evidence suggests that for the most part, women’s earnings are lower than those of similarly-situated men. Basing starting pay on prior pay simply perpetuates that disparity.[2]

Notwithstanding this case law as well as the Commission’s guidance, the panel here held that the County’s practice is permissible as long as the County can prove that its reliance on prior pay effectuates some business policy and the County uses the factor reasonably in light of its stated purpose as well as its other practices. Slip op. at 11. The decision should not stand.

First, the decision effectively endorses the discredited market forces theory. What the County pays new employees has nothing to do with their qualifications, and the practice is not even designed to attract better candidates. Rather, the County essentially admits that it pays what it thinks the market will bear — less to employees whose prior salaries were lower on the assumption that they will be willing to work for less, thereby saving taxpayers money. But whether or not the practice makes economic sense, it undermines the purposes of the EPA since those people will likely be women.

Second, the decision institutionalizes the gender pay gap that Congress aimed to eliminate in passing the EPA. Ample evidence confirms that women continue to earn less than otherwise similarly-situated men nationwide, including in California and Arizona (where Rizo previously worked) as well as in the field of education. Both the district court and Rizo, for example, cited survey results from the Bureau of Labor Statistics showing that even though women outnumber men in the field of education, men continue to out-earn their female colleagues. See Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, Household Data Annual Averages, Median weekly earnings of full-time wage & salary workers by detailed occupation & sex: Education, training, & library occupations (2016), available at http://www.bls.gov/cps/cpsaat39.pdf (last modified Feb. 8, 2017). See also IWPR, The Gender Wage Gap by Occupation 2015 & By Race & Ethnicity tbl.1 (listing median weekly earnings of female and male elementary and middle school teachers ($957 vs. $1077), adding that women hold 80.6% of such jobs), available at http://www.iwpr.org/publications/pubs/the-gender-wage-gap-by-occupation-2015 (last visited Oct. 4, 2016); AFL-CIO, Dep’t for Professional Employees, Fact Sheet 2010, Professional Women: Vital Statistics, at 3 (2010) (“Female elementary and middle school teachers earned over 14% less than similarly situated men, despite comprising almost 82% of the field.”), available at

https://www.pay-equity.org/PDFs/ProfWomen.pdf (last visited May 17, 2017); AAUW: The Simple Truth about the Gender Pay Gap (Fall 2016) (median earnings for full-time year-round workers in California are $50,562 for men, $44,050 for women, a ratio of 86%), available at http://www.aauw.org/files/2016/09/the-simple-truth-figure-2-v2.jpg (last visited Oct. 4, 2016). If, as the panel holds, employers may base starting pay on what employees earned in their previous jobs, women on average will continue to earn less than men for substantially equal work.

The County argued that it does not discriminate on the basis of sex; its practice is gender-neutral. But to the extent that one employer discriminated in pay against a female employee, the next employer — even one like the County whose practice is simply to carry forward any existing pay discrepancies — would benefit from the prior discrimination to the detriment of that employee by paying her less than male employees not similarly subject to prior discrimination. See Compl. Man. §10-IV.F.2.g (citing Faust v. Hilton Hotels Corp., No. 88-2640, 1990 WL 120615, at *5 n.12 (E.D. La. Aug. 13, 1990)). And in any event, it is entirely foreseeable that the most recent prior pay of women like Rizo will be lower than that of similarly-situated men. Thus, rather than making strides toward eliminating the gender pay gap, a practice like the County’s institutionalizes the disparity.

For just that reason, the Eleventh Circuit has held that “prior salary alone cannot justify pay disparity” under the EPA. Irby, 44 F.3d at 955. To hold otherwise, the Court reasoned, “would require the court to contravene Congress’ intent and perpetuate the traditionally unequal salaries paid to women for equal work”— something the court “refuse[d] to do.” Price v. Lockheed Space Ops. Co., 856 F.2d 1503, 1506 (11th Cir. 1988).

This Court, too, should refuse to contravene Congress’ intent and sustain the traditionally unequal salaries paid to women for equal work. And because the panel decision would allow employers like the County to continue basing starting pay exclusively on employees’ most recent prior pay, and thereby perpetuating gender-based pay disparities, the decision should be overturned.

B. Rehearing is appropriate because the panel decision conflicts with authoritative decisions of the Tenth and Eleventh Circuits.

Rehearing is appropriate where a proceeding involves a “question of exceptional importance.” A prime example of such a question is where the proceeding “involves an issue on which the panel decision conflicts with the authoritative decisions of other United States Courts of Appeal that have addressed the issue.” Fed. R. App. P. 35(b)(1)(B); see also Circuit Rule 35-1.

This appeal raises a question of exceptional importance. As noted above, both the Tenth and Eleventh Circuits have held unequivocally that “prior salary alone cannot justify pay disparity under the EPA.” Irby, 44 F.3d at 955 (11th Cir.) (citing Price, 856 F.2d at 1506; Glenn, 841 F.2d at 1571 & n.9); Riser, 776 F.3d at 1199 (10th Cir.) (citing Angove, 70 F. App’x at 508). The panel decision — holding that, with the appropriate showing, prior pay alone can be a factor other than sex even if it causes a pay disparity — cannot be reconciled with these “authoritative decisions” of the other circuits. Rehearing is therefore appropriate.

We recognize that even if this Court adopts the rule from the Tenth and Eleventh Circuits, it will not entirely eliminate the circuit conflict. The Seventh Circuit takes the position that “prior wages are a ‘factor other than sex.’” Wernsing v. Ill. Dep’t of Human Servs., 427 F.3d 466, 468 (7th Cir. 2005) (citation omitted). However, that circuit is an outlier — it also holds that the “factor other than sex” need not be “related to the requirements of the particular position” nor even “business related.” Id. at 468-70 (noting disagreement with Kouba, 691 F.2d 873 (9th Cir.); Glenn, 841 F.2d 1567 (11th Cir.); Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520 (2d Cir. 1992); and EEOC v. J.C. Penney Co., 843 F.2d 249, 253 (6th Cir. 1988)). In contrast, this Court, as well as those other courts, has long held that because the EPA “concerns business practices,” it would be “nonsensical to sanction the use of a factor that rests on some consideration unrelated to business.” Kouba, 691 F.2d at 876; see also Glenn, 841 F.2d at 1570-71; Aldrich, 963 F.2d at 526; Beck-Wilson v. Principi, 441 F.3d 353, 365 (6th Cir. 2006)). Thus, any suggestion that the Court should join the Seventh, rather than the Tenth and Eleventh Circuits, should be rejected.

CONCLUSION

The Tenth and Eleventh Circuits correctly hold that prior pay alone cannot justify a compensation disparity. This Court’s current rule, as emphasized by the panel in this case, conflicts with the rule in those circuits. The Commission therefore asks this Court to grant en banc review and hold that employers may not base the starting pay of a new employee solely on that employee’s most recent prior pay.

Respectfully submitted,

JAMES L. LEE

Deputy General Counsel

JENNIFER S. GOLDSTEIN

Associate General Counsel

ELIZABETH E. THERAN

Acting Assistant General Counsel

s/ Barbara L. Sloan

BARBARA L. SLOAN

Attorney

U.S. EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION

Office of General Counsel

131 M Street N.E., 5th Floor

Washington, D.C. 20507

(202) 663-4721

FAX: (202) 663-7090

barbara.sloan@eeoc.gov

Certificate of Compliance

This brief complies with the type-volume limitation of Fed. R. App. P. 29(b) and 32(a)(7)(B) because it contains 3004 words from the Statement of Interest through the Conclusion, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(ii).

This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a proportionally spaced typeface using Microsoft Word 2010 with Garamond 14-point font.

s/ Barbara L. Sloan

BARBARA L. SLOAN

Attorney for Equal Employment

Opportunity Commission

Dated: May 22, 2017

[1] Math Consultants start at Level 1, which has ten steps. The County places each employee on the step that most closely corresponds to 105% of his or her prior pay. 105% of Rizo’s prior pay fell below the pay scale; at Step 1, Level 1, she was paid $62,133. Slip op. at 5. Her closest colleague was paid $73,832. ER000449.

[2] The panel concluded that “requiring an employer to consider factors in addition to prior salary” would not prevent the perpetuation of existing pay disparities if, as the court assumed was true in Kouba, prior pay was the only factor that caused the resulting pay disparity. Slip op. at 10. That concern is overstated. Factors such as education and relevant experience ordinarily are not gender-based. To the extent the employer actually considers such factors — rather than merely paying lip-service to doing so, as the panel’s example suggests — it dilutes the relative importance of prior pay in the decision. And in reality applicants rarely have “identical education and experience” (id.). One might have better references, another more relevant experience, while a third graduated with honors from a prestigious university. If an employer sincerely weighs such factors with prior salary, there is no reason to think the resulting pay decisions would perpetuate the gender pay gap.