Gov. Phil Murphy recently signed into law the Diane B. Allen Equal Pay Act(P.L. 2018 c. 9), amending the New Jersey Law Against Discrimination. While the act has been promoted as equalizing pay between men and women, it actually expands equal pay protections beyond gender and includes all members of protected classes who work and/or live in New Jersey.

According to the law, a protected class is defined to include race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait, service in the Armed Forces of the United States or the nationality of any individual, and individuals who have refused to submit to a genetic test or make the results of a genetic test available to an employer.

New Jersey’s anti-discrimination law, one of the most comprehensive in the nation, specifically prohibits discriminatory employment practices based on a person’s immutable characteristics.  Generally, the act prohibits employment decisions that are based on the above characteristics and encourages the reporting of discriminatory employment practices.  Specifically, the act defines an unlawful employment practice as one in which an employee’s compensation or the financial terms and conditions of their employment are based on a discriminatory compensation decision. The definition includes each occasion that wages, benefits or other compensation are paid based on the discriminatory decision.

The act lengthens the statute of limitations for claims based on pay equity to a period of up to six years. Previously the Law Against Discrimination had a statute of limitations of two years. However, there are some limited exceptions to the equal pay requirement. Most of these exceptions are found in seniority and/or merit-based pay systems. Nevertheless, there are some specific reasons an employer may be able to pay a different rate to individuals if they can demonstrate the following:

  1. The difference in pay is based on one or more legitimate factors such as training, education or experience, or the quantity or quality of work production;
  2. The differential factors are not based on and do not perpetuate distinctions based on sex or any other characteristic of a member of a protected class;
  3. That each of the factors is applied reasonably;
  4. That one or more of the factors account for the entire wage differential; and
  5. That the factors are job-related with respect to the position in question and based on a legitimate business necessity. However, the business necessity exception does not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.

In regard to damages, employers are facing a hefty fine if they are found liable for a violation of the act. A judge or jury can award treble damages for the violations if an employee can successfully prove that the employer retaliated against him or her for requesting, discussing, or disclosing compensation to any of the following:

  1. Another employee or former employee of the employer,
  2. A lawyer the employee is seeking legal advice from, or
  3. Any government agency.

Treble damages are available to an employee or prospective employee who is asked by the employer to sign a waiver regarding discussing or disclosing pay practices or rates. Other potential remedies that may be imposed against employers include hiring, reinstatement or upgrading of employees, with or without back pay; and extending full and equal accommodations, advantages, facilities, and privileges to all persons, as necessary to fully implement the act, and order a report of compliance.

This act goes into effect on July 1, 2018. Employers will need to make sure that their employee handbooks and hiring/compensation packages insure pay equity for employees who perform “substantially similar work”. For additional information, board members may contact the board attorney or the NJSBA Legal Department.