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NJ Enacts Equal Pay Law

On April 27, 2018 by Schnader in Labor and Employment

By Jo Bennett

On April 24, New Jersey Governor Phil Murphy signed the Diane B. Allen Equal Pay Act into law.  Most commentators consider it the strongest equal pay law in the nation.

The law amends New Jersey’s Law Against Discrimination to make it illegal to pay employees of protected classes rates of compensation, including benefits, less than the rate paid to employees not of the protected class for “substantially similar work when viewed as a composite of skill, effort and responsibility.”  The protected classes are broad and include characteristics such as age, disability, gender, race, sex, and sexual orientation.

The phrase “substantially similar work” in New Jersey’s law is a departure from most laws aimed at the gender wage gap, which tend to require “equal pay for equal work.”  While it remains to be seen how the courts will apply this phrase, employers should assume that it would cover workers with different titles in different departments who have similar levels of responsibility.  The Act does carve out limited exceptions for circumstances such as seniority, education level, or quantity/quality of production. However, the statute prohibits an employer from justifying a lower salary based on an employee’s past salary at a prior employer.   

Other highlights of the new law include:

  • Employers are prohibited from retaliating against workers who discuss their compensation with co-workers;
  • Employers are prohibited from cutting the pay of a higher-paid worker in order to bring salaries in line upon discovering a pay discrepancy;
  • The statute of limitations for claims based on pay equity is six years;
  • Employees may seek up to six years of back pay for alleged violations of the law; and
  • Treble damages may be awarded if an employer is found in violation of the law.

The legislation, which was previously vetoed several times by former Governor Chris Christie, takes effect July 1.  In the meantime, employers are advised to review their hiring and compensation practices to ensure compliance.