One of the most common pay-determining techniques could now put your company in legal danger.

The 9th U.S. Circuit Court of Appeals just unanimously ruled that pay differences based on prior salaries are inherently discriminatory under the Equal Pay Act because those past salaries stemmed from gender bias.

The ruling was handed down in Rizo v. Yovino, a lawsuit in which a teacher claimed she was paid thousands of dollars than a male colleague with less experience, education and seniority.

Fresno County had a formal procedure that determined a new hire’s starting salary by taking the new hire’s prior salary, adding 5%, and placing the new employee on the corresponding step of Fresno County’s stepped salary levels.

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