A federal appeals court ruled Monday thatsalary history cannot be used to justify a wage gap between men and women, in a case thatemployee advocates said highlights a key issue that hasinstitutionalized gender compensation inequities.

The U.S. Court of Appeals for the Ninth Circuit, which heard thecase Rizo v. Fresno County Office of Education en banclast year, found that an employee's priorsalary—either alone or in a combination of factors—cannot be usedto justify paying women less than men in comparable jobs.

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“The Equal Pay Act stands for a principle as simple as it isjust: men and women should receive equal pay for equal workregardless of sex,” Judge Stephen Reinhardt wrote in the opinion.“The question before us is also simple: can an employer justify awage differential between male and female employees by relying onprior salary? Based on the text, history, and purpose of the EqualPay Act, the answer is clear: No.”

The courts have moved in different directions on this question.Two federal appeals courts—the Tenth and Eleventhcircuits—previously held that prior pay alone cannot be consideredas an exemption to equal pay laws. The Seventh Circuit has ruledthat previous salary could be considered. The Ninth Circuit onMonday fractured over whether pay history can ever beconsidered.

Reinhardt, who was widely recognized as one of the country'smost liberal judges, died last week at the age of87. The ruling noted the voting was complete before his death.

Aileen Rizo, a math consultant in Fresno County, California,filed the suit in 2012 after she discovered she was paid less thanmale counterparts by as much as $10,000. The county justified thepay differential based on the previous salary she made at a schoolin Arizona. The three-judge panel of the Ninth Circuit ruled thatsalary could be used by the county to justify the discrepancy. Thecase will return to the district court.

In Monday's ruling overturning the panel decision, Reinhardtwrote, “Salaries speak louder than words.” He noted that the EqualPay Act prohibits sex-based wage discrimination but prior to thisdecision the law was unclear on whether an employer could considerprior salary in determining pay scale. The majority ruling foundthat “to accept the county's argument would perpetuate rather thaneliminate the pervasive discrimination” that the federal law aimedto protect.

“In light of the clear intent and purpose of the Equal Pay Act,it is equally clear that we cannot construe the catchall exceptionas justifying setting employees' starting salaries on the basis oftheir prior pay,” Reinhardt wrote. “At the time of the passage ofthe act, an employee's prior pay would have reflected adiscriminatory marketplace that valued the equal work of one sexover the other. Congress simply could not have intended to allowemployers to rely on these discriminatory wages as a justificationfor continuing to perpetuate wage differentials.”

Jones Day partner ShayDvoretzky in Washington argued for the Fresno school district inthe Ninth Circuit.

Fresno County intends to petition the Supreme Court to reviewthe Ninth Circuit decision, according to astatement provided by Michael Woods, of counsel to McCormickBarstow LLP, which also represented the district in the appeal.

The Fresno County Superintendent of Schools said the policy thatdetermines salaries was “absolutely gender-neutral, objective andeffective in attracting qualified applicants and complied with allapplicable laws.”

Several judges expressed concern about the reach and practicalimplications of the majority's ruling, which was expressed as a“general rule” that did not touch individualized, negotiated salarydiscussions.

“Although the majority professes that its decision does notrelate to negotiated salaries, the principle of the majority'sholding may reach beyond these state statutes by making it aviolation of federal anti-discrimination law to consider priorsalary, even when an employee chooses to provide it as a bargainingchip for higher wages,” Judge M. Margaret McKeown, joined by JudgeMary Murguia, wrote in a concurring opinion. “I am concerned aboutchilling such voluntary discussions. Indeed, the result maydisadvantage rather than advantage women.”

The U.S. Equal Employment Opportunity Commission and otherwomen's rights advocates had urged the court to reconsiderthe panel decision, saying that any validation of such a practicewould institutionalize the gender pay gap. Studies show women make80 cents on the dollar to their male counterparts and that thedisparities are pervasive across industries.

Several cities and states have banned salary history inquiriesor have proposals pending, including California, Delaware,Massachusetts, Oregon, New Orleans, Philadelphia, Pittsburgh, NewYork City and Puerto Rico.

Closely watched gender-pay cases are movingforward in state and federal courts against major U.S. companies,including Google Inc. and Goldman Sachs. In the Google case, asmany as 5,000 women across several different job positions comprisethe class. The plaintiffs lawyers in that case zeroed in on thetech giant's company-wide policythat allows for job applicants to divulge their prior salaries.