New Jersey Enacts Broad Expansion of its Equal Pay Laws Bringing With It Significant Liabilities for Employers
New Jersey's Diane B. Allen Equal Pay Act (the "Equal Pay Act" or "Act") will become effective on July 1, 2018 and significantly expands New Jersey's equal pay laws. Violations of the Equal Pay Act will carry substantial liabilities, so New Jersey employers will need to act quickly to ensure compliance with the new law.
The Equal Pay Act requires that an employer pay all employees who perform "substantially similar work" equally. Under the Act, whether work is substantially similar depends, not solely on an employee's job title, but the employee's actual "skill, effort and responsibility." Expanding upon existing New Jersey law, the Act will allow pay equity claims to be brought on the basis of any protected characteristic, including race, gender, disability, age, national origin, marital status, or ethnicity.
Pay differentials for substantially similar work will be permitted only when an employer can show that:
The pay differential is based upon one or more legitimate factors such as experience, training, education, or job production;
The factors do not perpetuate pay disparity for protected classes;
The factors are reasonably applied;
The factors account for the entire wage differential; and
The factors are job related and based upon legitimate business necessity.
The Equal Pay Act lengthens the time period for the filing of a claim to six years and provides that each wage payment (i.e. paycheck) is a separate violation. Significantly, the Act also provides for treble (i.e. triple) damages for any violation.
Given the upcoming effective date of the Act, New Jersey employers should immediately start to review their compensation practices to ensure that all employees performing substantially similar work are being paid equally. This is particularly true for employers that have based compensation decisions upon an applicant's or employee's salary history, which could result in unintended pay disparity.
If you have any questions about the Equal Pay Act or your business's pay practices, please contact us at (201) 345-5412 or firstname.lastname@example.org.