New Jersey Equal Pay Act

Scale of Justice

Scale of Justice

Last month the Diane B. Allen Equal Pay Act (the “Act”) was signed into law by New Jersey Governor Phil Murphy.  This marks the third time in four years that the NJ legislature has amended its Law Against Discrimination.  The Act expands equal pay protections for NJ employees and increases compliance obligations on NJ employers.  The Act goes into effect on July 1, 2018.  In a nut shell, the Act makes it an illegal employment practice to pay an employee who is a member of a “protected class” less compensation and benefits for performing substantially similar work by employees outside of the “protected class” unless the employer can show a recognized exception.  In addition, the Act imposes public reporting requirements for employers who deal with public contracts.

Substantially Similar Work and Recognized Exceptions to Equal Pay Act

The Act instructs that “substantially similar work” will “be viewed as a composite of skill, effort and responsibility” unless such similar work and corresponding pay discrepancy can be supported by recognized exceptions.  Recognized exceptions to unequal pay for members of a protected class include seniority and/or merit systems and other identified factors so long as the employer can demonstrate a legitimate and causal connection to the difference in wages.  Unlike other states’ equal pay acts, the NJ Act does not allow an Employer to pay different wages to protected classes based upon in state work locations.  In the past, an employer might have justified pay discrepancies based upon costs of living differences per office location.  This practice is now illegal.

Statute of Limitations and Damages under Equal Pay Act

The statute of limitations under the Equal Pay Act is six years and restarts with every paycheck that is of unequal pay.  It is also illegal for an employer to shorten the statute of limitations under the Act or to waive any of the Act’s protections.  Employers who violate the Act may be responsible for up to treble damages.  Damages for violations of the Law Against Discrimination include economic, compensatory, punitive and attorneys’ fees.

Take Away for Employers

The take away is that the employment landscape changes almost on a daily basis and this is just another reason why it makes sense to sit down with your attorney and discuss how to  analyze your current pay structure.  This self audit should include not only a raw number analysis but also consider the hiring, promotion and compensation process itself for inherent and subconscious biases.  At the conclusion of the audit, make sure you train the appropriate individuals within your entity to make sure they are aware of the new requirements at play and update your employee handbook as well.

Douglas Leavitt is an attorney with Danziger Shapiro and focuses his practice on guiding business with their daily operational needs.  Please feel free to contact him or any of the other attorneys at Danziger Shapiro to discuss how this new change will affect your business or any other issue you may have that concerns you and your business.

This entry is presented for informational purposes only and does not constitute legal advice.

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