A federal appeals court ruled on Monday that relying on a woman’s previous salary to determine her pay for a new job perpetuates disparities in the wages of men and women and is illegal when it results in higher pay for men. The ruling undercuts one of the key arguments employers have for allowing pay disparities between women and men to continue.

The Equal Pay Act, signed into law by President John F. Kennedy in 1963, forbid employers from paying women less than men based on gender for equal work performed under similar conditions. But it created exemptions when pay is based on seniority, merit, quantity or quality of work or “any other factor other than sex.”