Some jurisdictions have begun restricting the practice by many employers of considering applicants’ earnings history when setting compensation. Those in favor of such measures maintain that when employers consider prior earnings, “women often end up at a sharp disadvantage and historical patterns of gender bias and discrimination repeat themselves, causing women to continue earning less than their male counterparts.” A.B. 1676, Cal. Leg. (2016). Several federal appellate courts have discussed a related issue—whether the Equal Pay Act already prohibits sole reliance on prior earnings to explain a wage differential challenged under the Act. In this month’s column, we outline the circuit split on this issue, summarize recent measures in California, Massachusetts, and Philadelphia restricting the use of prior earnings, and provide guidance for employers seeking to maintain compliant hiring and pay practices.

Background

The Equal Pay Act prohibits employers from discriminating on the basis of sex by paying less in wages to employees than it pays those of the opposite sex for equal work on jobs requiring “equal skill, effort, and responsibility, and which are performed under similar working conditions.” One exception is when the wage differential is “based on any other factor other than sex.” 29 U.S.C. §206(d)(1).