United States: Gov. Christie Vetoes Proposed Equal Pay Act Again As ‘Business Unfriendly'

On May 2, 2016, New Jersey Gov. Chris Christie, for the second time, issued a conditional veto of proposed legislation that would bar gender-based pay discrimination, saying in part that the Bill would go too far beyond federal standards and make New Jersey "very business unfriendly."

In an effort to address and remediate gender-pay gaps in the state, the New Jersey Senate introduced and passed Senate Bill No. 992 (the "Bill") in February 2016. The Bill comprised similar terms presented in two separate Senate bills back in 2012, one of which Gov. Christie issued a conditional veto of in March 2012, explaining at the time that his opposition sprang from the bill's failure to include an explicit statutory limitation on back-pay recoveries for employees. Other provisions of the current Bill that would have required government contractors to report employee gender and compensation information to the New Jersey Department of Labor were also vetoed by Gov. Christie in 2012, who commented back then that the unique gender and pay-data reporting requirements would impose costly burdens on the state's employers.

The recently proposed legislation, if ratified, would have expanded gender-pay discrimination provisions of the current New Jersey Law Against Discrimination ("NJLAD"), providing for far more expansive liability for employers than exists under current federal law. Consider the following provisions, which Gov. Christie criticized in his veto:

  • A "restarting" of the statute of limitations each time wages are paid to the employee but – unlike under the Lilly Ledbetter Fair Pay Act – without any limitation of the amount of back pay an employee could recover
  • A prohibition against employers requiring employees or prospective employees to consent to a shortened statute of limitations or to waive any of the protections of the law, including the right to disclose wage or benefit information
  • An allowance of pay differentials only when made pursuant to a seniority system, a merit system, or based on legitimate, bona fide factors other than sex, such as training, education, experience, or the quantity or quality of production – essentially shifting the burden of proof to justify pay differentials to employers
  • The availability of treble damages awards, not available under the enacted federal legislation
  • A continual reporting requirement for employers who are government contractors, requiring frequent reports to the Department of Labor and Workforce Development of employee demographics and compensation information

While emphasizing his strong and long-standing support for equal pay protections, Gov. Christie stated the proposed legislation would "materially change the legal standard for establishing wage discrimination" in the state, and commented that it would cause New Jersey to become a liberal outlier in terms of available recovery for pay discrimination.

However, the vetoed legislation – while going a bit further than the New York law passed last year – is substantially similar in its provisions to the California Pay Act adopted in 2015. To this end, it is the California law that requires employers to pay men and women the same for "substantially similar work," not just the exact same job as under the federal legislation or the "equal work" standard adopted in New York, unless differences can be shown based on productivity, merit, and/or seniority to justify the pay differential. Not surprisingly, the New Jersey legislature has modeled its amendment on the California approach, as it had done with the original adoption of the NJLAD many years ago.

With Gov. Christie's conditional veto, the Bill goes back to the Legislature, which can agree by a simple majority to amend the Bill to remove the provisions to which the governor has objected (thus adopting standards similar to the federal legislation), or seek to override Gov. Christie's veto by a two-thirds majority (27 in the Senate, 54 in the Assembly).

While the shape and future passage of this Bill remains uncertain, proponents of the Bill have criticized the federal law and are likely to continue to push to pass a law that, at a minimum, places the burden on New Jersey employers to justify pay differentials between genders.  Because the enactment of the Bill would dramatically increase employer liability, prudent New Jersey employers should take time now to start re-evaluating job descriptions and job titles to identify any "substantially similar" jobs with pay differences between genders that may cause concern if the standard set forth in the Bill is ultimately enacted, and also document the bona fide business purpose driving any identified pay-related differences.

We will provide updates on future developments.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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