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Prior salary does not justify a gender wage gap in salary

Employee pay is a touchy subject. Many Americans don’t like to talk publicly about what they earn—and many don’t like what they discover if they do talk about it. When an employee at the Fresno Country Office of Education discovered she earned less money than a less experienced colleague, it turned into a court battle that might go all the way to the US Supreme Court.

There is a proven gap is pay between women and men. The case in California is partly about the societal gender gap, and also about how previous salary affects your current pay.

The ruling

The ruling just issued by the US 9th Circuit Court of Appeals determines that previous salaries should not influence current salary. Based on the Equal Pay Act of 1963, all employees deserve comparable payment except in cases of seniority, merit, production, quality and “any factor other than sex.” The employer in this case argued that previous salary is one of those “other” factors. The employee argued that it was part of a larger social issue based unfairly on gender discrimination.

What does it mean?

There are important issues in this case, as it creates potential liabilities for companies that want to pay employees based on their previous jobs. While this case centers on discrimination against women, it leaves new, unchartered terrain about how employers should create offers for new employees.

The Fresno County Office of Education says they will appeal to the Supreme Court for another hearing on the case. As it stands today, companies risk a lawsuit by offering employees different payment packages. Even if the case is overturned by the highest court, it highlights the serious consideration companies need to put into any employment offer. Even the most fundamental parts of business, such as hiring or dismissing an employee, are subject to intense scrutiny to make sure that workers get a fair shake. Based on the article in L.A. Times, the Fresno woman was a well-performing employee contributing to the department. Now, instead of using her skills as an asset, her contract became a liability and she became a distraction in the office.

There are many areas of employment law that can drain needed resources from your company’s real focus: production, service and turning a profit. It’s important to regularly review all company policies and, when making important decisions, to consult with legal counsel and to research how they will comply with the law.

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