New Jersey’s Equal Pay Act

By Barry Fields, Vice President – Employee Benefits

Five Things to Know

If you are familiar with New Jersey antidiscrimination laws, you know that it is illegal to discriminate “in any way in the rate or method of payment of wages to any employee because of his or her sex.” This protection has now been extended with the passage of the Diane B. Allen Equal Pay Act—effective July 1, 2018—to “any protected class” under the law. This includes, among other things, such characteristics as race, national origin, age, marital status and disability.

Now would be a good time to ensure your pay practices are in compliance. Here are five important facts that you should consider to fully understand the importance of this new law:

State Business

Do you conduct business with the State of New Jersey? Consider whether you contract with the state for “qualifying services” or “public works” as there are new reporting requirements for such contracts to ensure compliance with the new law. Information such as gender, race, job category, hours worked and compensation must be provided to the state for each employee.

Treble Damages

Employers that were found guilty of discriminating in the past were required to pay money damages to right the wrong. The new law takes a more punitive approach by allowing prevailing litigants to recover “three times any money damages[.]” This should make ensuring your company’s compliance a top priority.

Some Pay Differences Are Still Permissible…

You would think that paying people differently while performing similar tasks is now prohibited under the law. However, the Equal Pay Act recognizes certain instances where pay differentials are acceptable. For instance, paying employees differently based on a merit or seniority system is permissible. And the state has created a “bona fide factors” test that would also allow for differing pay rates for similar tasks, though seeking out legal advice would be wise before proceeding under that test.

But Don’t Cut Pay!

Employers may think that one workaround to this new law is just to cut the pay of the higher-paid employee down to the rate of the lower-paid employee. Not so fast. As stated in the Equal Pay Act, “[a]n employer … shall not reduce the rate of compensation of any employee in order to comply with this[]” new law.

Back, Back, Back,…

No, this is not a home run call. This refers to the fact that, under the new law, employees who prevail in a pay discrimination claim may be eligible for up to six years of back pay. This is all the more reason to comply with the Equal Pay Act.

 

Employers Need to Prepare

As noted, the Diane B. Allen Equal Pay Act went into effect on July 1, 2018. It is important to be thorough in order to ensure compliance with this new legal mandate and minimize the costs associated with future litigation by employees and the negative attention that may result from a challenge to your company’s pay practices.

Your organization should take steps to ensure that, unless the exceptions noted above apply, your existing pay practices and policies related to compensation result in equal pay for employees who do substantially similar work. This should involve a privileged pay audit where you can determine whether your company has any troubling pay disparities and, if so, take steps to remedy any differences that could be attributed to membership in a protected class.

 

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