An equal right for all is always a hot button topic and Rizo v. Yovino is a very hot button case. Many small and large businesses have paid particular attention to this case as it directly relates to how they compensate current and future employees. The Ninth Circuit Court of Appeals just issued a ruling reversing the United States District Court, Eastern District of California which ruled that an employer violated the Equal Pay Act by calculating a new employee’s salary using their prior salary.
Rizo v. Yovino
The Plaintiff, Aileen Rizo, was hired in 2009 into a management position as a math instructor. She was hired with a starting salary of $62,733 a year which was higher than her prior position but was at the lower end of the scale for the new position. In 2012 she learned that a male colleague was recently hired into the same position with a starting salary of over $10,000 more a year than her. She later learned that all of the men in her position were being paid a higher salary than she was. Rizo hired an attorney and filed a complaint against the Fresno County Office of Education alleging that they violated the Federal Equal Pay Act.
The Defendant, Fresno County Office of Education, answered the complaint by detailing the business rationale behind its procedure for salary determination. One of the four rationales was to base the starting salary off the prior salary with a five percent increase.
Many believe the Fresno County School System’s bright-line policy violated the prior salary/ reasonable consideration ruling laid out in Kouba v. Allstate Insurance Co. and further believe this ruling will hamper women’s ability to equal pay in the workforce. While the ruling follows the letter of the law, it does leave room for interpretation of the Equal Pay Act. How can women be protected under the Equal Pay Act if they historically have made less than their male counterparts.
California Equal Pay Act 2017
However, California has taken this Federal Equal Pay law into its own hands and given women a more definitive answer. California has its own law which mandates that a prior salary alone cannot rationalize a pay difference in two equally qualified individuals. The California Equal Pay Act was enacted on January 1, 2016 and detailed that salary history can be used as a determining factor; however, pay differences between the sexes must also be based on a minimum of one other factor. This past January California further tightened its Equal Pay Act by including salary differences between members of different ethnicity.
Further, keep in mind that the law prohibits an employer from retaliating against employees that discuss their salary even if that salary discussion leads to a wage lawsuit. As such, all California businesses should review their employee’s salary levels and make sure they are not violating either the Federal or California Equal Pay Acts.
College tuition is on the rise in almost every campus across the United States, which makes saving for college an essential part of rising kids today. When exploring bankruptcy you may be wondering what will happen to your child’s college savings accounts? Well the answer to this, like most bankruptcy questions, is somewhat complicated and dependent on numerous factors. The broad answer would be, yes, some college savings accounts can be protected through a bankruptcy exemption, while others will not be afforded that protection.
In order to determine if your child’s college saving account will be protected in a bankruptcy action, your bankruptcy attorney will need to review the following aspects:
- What type of savings account is it?
- When was the savings account created and funded?
If your child’s savings account is held in a traditional bank savings account, a brokerage account or other non state-run program it will not be excluded from a bankruptcy filing and therefore not protected. This includes funds that were gifted to your child from relatives because you are the account owner and in control of the funds within it.
Are 529 Plans Exempt In Bankruptcy?
On the contrary a 529 college savings account can be protected under US Bankruptcy code. What is a 529 Plan? In the late 1990’s the IRS created a savings plan that would allow parents to put money into a savings account that could be spent on a child’s future educational needs. Most 529 plans are funded with pre-tax dollars and as long as the child uses the money for education expenses it will not be taxed when it is used. 529 plans are state sponsored and some states offer a tax deduction associated with the account. While California does sponsor a 529 plan it does not offer a tax deduction. 529 plans are a good option for college savings funds but beware they do have strict guidelines on how the money may be used.
As mentioned above, 529 plans can be protected in a bankruptcy filing but timing is of the essence. The Ninth Circuit Court of Appeals ruled in 2009 that money invested in a 529 plan in the year prior to a bankruptcy filing will not be protected. The court went on to rule that money added between one and two years would only be afforded protection of up to and including $5,580. Money invested in a 529 plan more than two years prior to the bankruptcy filing would is fully protected by bankruptcy code 11 USC Sec. 541(b)(6). As you can see a 529 plan provides asset protection for college funds at various levels given the time money has been invested and 529 plans are protected from creditors in California following the same timing guidelines.
Lastly, you need not worry about losing your child’s savings account with a Chapter 13 bankruptcy filing, as your assets will only be seized and taken by the trustee in a Chapter 7 bankruptcy case.
All areas of the law are quite complicated and bankruptcy is definitely not an exception. Bankruptcy codes are full of rules and regulations and there are multitudes of ways in which you can craft a bankruptcy to best benefit your situation. If you would like to explore your bankruptcy options and how to protect your child’s college savings accounts, contact Goldbach Law Group for a free consultation.