Can I ask an applicant for their prior salary? Is that gender pay discrimination?

This mirrors a recent trend across the country to push back against employers looking at prior salary when determining how much they will pay an employee.

In this lawsuit, the female employee argues that her employer expressly considered each job applicant’s prior compensation (i.e., the compensation the prospective employee was earning immediately prior to employment with the company) in determining that employee’s initial compensation level. In doing so, the employer’s hiring policies and practices “perpetuated gender discrimination,” since women’s salary history tends to reflect lower pay than men’s. The female employee who filed the lawsuit argued that by inquiring about salary history, the employer’s compensation policies, practices and procedures continued the historic pay disparity between men and women, resulting in male employees receiving higher starting salaries than women, even when those men and women are hired into the same job position and perform substantially equal or similar work. She emphasized in her lawsuit that these disparities were compounded year on year.

Labor & Employment law - Employers only

After her efforts to resolve her complaints internally were unsuccessful, she filed a lawsuit to address the “rampant” gender pay discrimination. In the lawsuit, the employee is claiming that the employer routinely underpays its female employees, passes them over for promotion, piles on extra work without additional compensation, and does not supply sufficient support staff to women employees. She argues that the administration of the employer’s compensation system is “centralized,” and the company’s compensation decisions originate from a highly-concentrated and male-dominated management “regime.” Her theory is that the employer’s centralized compensation policies, practices and procedures, which result in unequal pay, include initial salary determinations based on prior salary history, initial job assignment, career progression, training, promotions, and evaluations.

Law Office of David Miklas, P.A.

A female employee was hired by her employer in 2008. In 2017 she raised the issue of unfair pay with her employer’s Human Resources department. She explained that she believed she was earning less than men performing the same job duties, and she asked the employer to perform an audit to determine whether she should be paid more. Six men held the same job title as the female employee, but all of the men had higher base salaries than she did. One recently-hired male manager, with several years less experience than her, was paid $20,000 more than her. Five months after she asked the employer to look into whether she was being paid fairly, the employer told her that her pay was not due to gender. Nonetheless the employer increased her pay by 23%, claiming it was an “equity adjustment” due to “market forces.” Even with this pay increase, she still earned less than several male “managers.” The female employee learned that at the same time she received an “equity adjustment,” two other female managers also received a 26 -27% raise, which she believed suggested that the employer recognized the pay disparity was widespread.

Also, in the lawsuit is an argument that the employer’s leadership tends to value male workers more than female workers. The company’s overall corporate culture and the uniform policies, procedures and practices inevitably result in systemic pay discrimination to the disadvantage of the company’s female employees. The employee argued that such pay discrimination is manifested in multiple ways, including by:

- paying female employees less than similarly-situated males;

- failing to advance female employees at the same pace as male employees performing equal or substantially similar work; and

- other adverse employment actions.

            This lawsuit was strategically filed in state court in Los Angeles California and was based on the California version of the Equal Pay Act. The females bringing the lawsuit chose to bring it as a class action. Rasmussen et al. v The Walt Disney Company, et al. Case number 19STCV0974 (filed April 2, 2019).

            Of course, this is only the employees’ allegations and the employer may have adequate defenses. The significance about this lawsuit is that it reflects a recent trend to try and prevent employers from using an applicant’s prior pay to set their current pay, as this often negatively impacts women. There was some suggestion that race may be involved as well, but the main focus of the lawsuit was gender.

            Florida employers should take serious note of this lawsuit and trend and evaluate whether they ask applicants for their current or past salary amounts, and if doing so is wise.

If you need any assistance in determining in pay practices or addressing employee complaints of discrimination concerning your Florida business, please email the Law Office of David Miklas, P.A. or call us at 1-772-465-5111.

You can read more of our employment law articles on our legal updates page.

If you know a Florida business owner or Florida human resources professional who would benefit from this article, please share it with one click to social media or email.