Setting a new employee’s pay based on what he or she made at a prior job is a fairly common practice—but now an illegal one in Philadelphia, PA. You heard right, Philadelphia has banned questions about salary history. This local law follows a Massachusetts law (similar but not identical) aimed at closing the pay gap between women and minorities and their white male counterparts.
But you don’t have employees in Philadelphia (or Massachusetts). More importantly, you don’t set pay based on race or gender and recognize that to do so would violate Title VII of the Civil Rights Act of 1964. I want to remind you that it would also violate the Equal Pay Act of 1963 (EPA), which provides:
No employer . . . shall discriminate . . . between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex . . .
Unlike Title VII, the EPA doesn’t require the employee to establish intent to discriminate—merely that she is paid less than a male comparator.
Why am I boring you with what you already know? I’m glad you asked.
Nearly every Equal Pay Act claim I have defended was about a female employee who was paid less than a male counterpart and her wage was set based on her prior employment. In one particularly frustrating set of facts, my client was sued for pay discrimination under Title VII (based on race and sex) and the EPA (based on sex). She was in a job classification that had about 15 women and 2 men. There was a pay range and all of the employees fell within it. The plaintiff, who was a slightly less than average performer, was in the bottom half of the crowd. The two men were not the highest paid, in fact one of the men made less than the plaintiff. The highest paid people in the group were women and were the same race as the plaintiff. We got summary judgment on the Title VII claims—but not on the EPA claim.
To establish her EPA claim, the plaintiff only had to show that one man was doing the same job and being paid more. That he was paid only a little more (less than a dollar an hour) and within the pay range didn’t matter. That there were lots of women paid more than him didn’t matter. We explained that the reason he was paid slightly more was because when we set salaries, we considered prior pay. The male comparator was making slightly more than the plaintiff in his prior job, so he started at a slightly higher pay. Summary judgment denied.
Don’t let this happen to you. Even if you can ask about prior pay, be careful how you use it. Make sure employees doing the same job are making the same pay or that you can explain why they aren’t. You can make pay distinctions because someone has been with the company a long time (seniority), gets better performance evaluations (merit), or produced more (quality or quantity of production). Make sure it is not simply based on what they made in their last job.