Today Governor Phil Murphy signed into law the Diane B. Allen Equal Pay Act (“Equal Pay Act”), which modifies the New Jersey Law Against Discrimination (“NJLAD”) and is viewed as one of the, if not the broadest equal pay law in the nation.
With significant changes to the NJLAD, there is no doubt that the new equal pay law is an invitation for increased litigation. The drafting of the legislation raises a number of questions for employers as to what this law actually does and how this law impacts them. To assist, below are answers to some of the biggest questions employers may have about the Equal Pay Act.
- Wasn’t “equal pay” already the law in New Jersey?
Yes. However, this law fundamentally redefines what it means to be “equal.”
- So who do I have to pay equally under this new law?
Under the law, it will be unlawful to pay (including benefits) an employee protected under NJLAD less than another individual not in that employee’s protected class for “substantially similar work.” In comparing employees, the employer must look at all of its operations or facilities. For example, an employer could not pay a white woman who works in its Newark office less than a white man who works in its West Orange office or a woman with a disability less than a woman without a disability for substantially similar work.
Importantly, the employee does not have to prove that the wage difference is due to her being a member of a protected class; instead, the employee merely must show that she is being paid less for substantially similar work and is a member of a protected class.
Employers are not absolutely barred from paying covered protected individuals less. Instead, the employer must be able to prove that the wage difference is due to a seniority system or merit system or due to some other legitimate factor—such as training, education, or experience—that is based on a business necessity.
- How long does an employee have to file a lawsuit?
The law has not changed in this area. Employees have two years to file a claim for a violation of the NJLAD. However, each time a paycheck is issued, a new violation occurs, which restarts the two year period to file a claim.
- What damages can a successful employee receive?
A successful employee may receive up to six years of damages, so long as one violation occurs with the two year statute of limitations period. In addition, successful employees are now entitled to three-time damages.
- Can I ask my employee to waive their rights or shorten the statute of limitations?
No. While employers were already prohibited from asking employees to shorten the statute of limitations, employers now also cannot ask their employees to waive any rights under the NJLAD.
- Can I prohibit my employees from discussing their wages?
No. While most employers were already not allowed to prohibit their employees from discussing wages under the National Labor Relations Act, now all employers in New Jersey are prohibited from the same.
- Can I decrease some employees’ wages to ensure I comply with the law?
No. While you may be able to decrease the salary of an at-will employee for another reason, the law expressly prohibits decreasing the employee’s salary to comply with the Equal Pay Act.
- I’m a public contractor. Are there any special requirements that apply to me?
Yes. The Equal Pay Act requires certain public contractors to provide data regarding wages and hours worked for certain employees based on gender, race, ethnicity, and job category. According to the law, a form will be provided to track and submit that information.
- With so many changes, how do I ensure I am compliant with the law?
This law does not become effective until July 1, 2018, so employers should speak to counsel about how this law impacts them. Employers should also consider engaging in internal audits and assessments to ensure compliance with the Equal Pay Act before it becomes effective. While increased litigation is an inevitable consequence of this new legislation, proper planning can not only assist in compliance but also assist in defending against NJLAD lawsuits.
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