A Capehart Scatchard Blog

New Jersey Equal Pay Act Takes Effect July 1, 2018

By: Kelly E. Adler, Esq.
Editor: Sanmathi (Sanu) Dev, Esq.

If you are a New Jersey employer and you have never heard of the Diane B. Allen Equal Pay Act (“Equal Pay Act”), pay close attention. At the end of March 2018, the New Jersey Legislature sent the Equal Pay Act to the Governor of New Jersey, Phil Murphy, for his signature.  Governor Murphy signed the bill into law on April 24, 2018.  The Equal Pay Act will go into effect on July 1, 2018.

Why is this legislation such a big deal for New Jersey employers? This is sweeping legislation and is the most comprehensive in the country. The Equal Pay Act is actually an amendment of the New Jersey Law Against Discrimination. Although it is generally mentioned as an equal pay measure to fix the gender pay gap, this legislation will actually prohibit pay gaps among all protected classes covered by the New Jersey Law Against Discrimination. The protected classes under the New Jersey Law Against Discrimination are significantly broader than under federal anti-discrimination statutes and include: race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces.

Additionally, a prevailing Plaintiff will be entitled to treble damages. This means a winning Plaintiff could be entitled to THREE TIMES the damages actually suffered, in addition to also being entitled to attorneys’ fees. The Equal Pay Act also provides for a six year statute of limitations that re-starts every single time the employee receives a paycheck that violates the law.   Note also, that employers cannot cut the salaries of higher paid employees to make up the pay gap.

There are some exceptions. An employer can pay different salaries if the employer demonstrates that the differential is made pursuant to a seniority system or a merit system or the employer demonstrates:

(1) That the differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class, such as training, education or experience, or the quantity or quality of production;

(2) That the factor or factors are not based on, and do not perpetuate, a differential in compensation based on sex or any other characteristic of members 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. A factor based on business necessity shall not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.

What should New Jersey employers be doing now? Well for starters, employers should be reviewing their employees’ salaries for any discrepancies in pay among members of protected classes that perform substantially similar work. If employers do discover a pay gap that is not attributable to one of the exceptions outlined above, employers need to prepare to close the pay gap quickly in order to prevent costly litigation and the potential for negative publicity. It is recommended that New Jersey employers contact their accountants and attorneys to discuss how to ensure compliance with the Equal Pay Act.

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