United States: New Jersey's Proposed Pay Equity Law Would Provide New Employee Protections

Last Updated: April 5 2018
Article by Thomas A. Linthorst, W. John Lee and Rudolph J. Burshnic II

The New Jersey Legislature passed a bill that makes it an unlawful employment practice to pay employees of a protected class a different rate of compensation from nonclass members for “substantially similar” work unless that pay discrepancy is based on a recognized justification. The state’s proposed pay equity law would also expand retaliation protections, mandate pay reporting obligations for employers that contract with public entities, and amend the statute of limitations for pay discrimination claims. The law would also require or permit enhanced damages awards to prevailing employees.

The New Jersey Legislature passed the Diane B. Allen Equal Pay Act, which amends the New Jersey Law Against Discrimination (LAD), on March 26, 2018. Governor Phil Murphy is expected to sign the legislation, which would be effective July 1, 2018.

While the proposed law has been touted primarily as a gender pay equity legislation, its reach is much broader. The proposed law’s pay equity provisions would apply to all protected classes, and it would also mandate an award of treble damages for certain prevailing plaintiffs, amend the LAD’s statute of limitations as to pay discrimination claims, expand retaliation protections, and impose pay reporting obligations on employers that contract with public entities.

Overview of the Proposed Law

Pay Equity Components

The amendment would make it an unlawful employment practice under the LAD to pay employees of a protected class different rates of compensation for “substantially similar” work when compared to nonclass members. (Prior versions of the legislation were limited to only prohibiting differential compensation between sexes.) Whether work is “substantially similar” is determined by a composite of the “skill, effort, and responsibility” required for that work.

If a different rate of compensation exists, it would be the employer’s burden to justify this difference based on (1) a “seniority system,” (2) a “merit system,” or (3) all of the following criteria:

  • The differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class, such as training, education, or experience, or the quantity or quality of production.
  • The factor or factors are not based on, and do not perpetuate, a differential in compensation based on sex or any other characteristic of members of a protected class.
  • Each of the factors is applied reasonably.
  • One or more of the factors account for the entire wage differential.
  • The factors are job related with respect to the position in question and based on a legitimate business necessity.

A factor based on business necessity would not apply “if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.”

Employers would be prohibited from reducing rates of compensation to comply with the law.

The proposed law would also require that “[c]omparisons of wage rates . . . be based on wage rates in all of an employer’s operations or facilities.”

If a jury were to determine that an employer had violated this pay equity section of the proposed law, the judge would be required to award “three times any monetary damages” (also known as treble damages). Where an employee brings a charge before the New Jersey Division of Civil Rights, the director would be permitted to award treble damages.

Amendments to the LAD’s Statute of Limitations

The proposed law would expand the LAD’s two-year statute of limitations for a claim relating to pay equity by providing that the limitations period restarts each time “an individual is affected by application of a discriminatory compensation decision or other practice,” including each time the individual receives compensation that results, in whole or in part, from a discriminatory decision. An employee could obtain up to six years of back pay on a pay equity claim. Specifically, the proposed law provides that “liability shall accrue and an aggrieved person may obtain relief for back pay for the entire period of time, except not more than six years, in which the violation with regard to discrimination in compensation or in the financial terms or conditions of employment has been continuous, if the violation continues to occur within the statute of limitations.”

In addition, the proposed law would make it an unlawful employment practice to require employees or prospective employees to “consent to a shortened statute of limitations or to waive any of the protections” provided by the LAD.

Expanded Prohibitions on Retaliation

The proposed law would expand existing prohibitions on retaliating against employees who seek to discuss, disclose, or request certain job-related information.

In this regard, an employer would be prohibited from retaliating against an employee for requesting from (regardless of whether the request was responded to), discussing with, or disclosing to (1) any other employee or former employee of the employer, (2) the employee’s lawyer, or (3) any government agency any of the following:

  • Information regarding the job title, occupational category, and rate of compensation, including benefits, of the employee or any other employee or former employee of the employer.
  • The gender, race, ethnicity, military status, or national origin of the employee or any other employee or former employee of the employer.

Currently, this section of the LAD only prohibits an employer from retaliating where the request from a current or former employee was for the purpose of investigating or taking legal action regarding discriminatory compensation.

The proposed law would also prohibit requiring that an employee or prospective employee, as a condition of employment, sign a waiver or otherwise agree to not make these requests or disclosures.

If a jury were to determine that an employer had violated the above retaliation provision of the proposed law, the judge would be required to award treble damages. Where an employee brings a charge before the New Jersey Division of Civil Rights, the director would be permitted to award treble damages.

In addition, the proposed law would expand retaliation protections for employees who seek legal advice regarding their rights under the LAD, share relevant information with their attorneys, or share information with a governmental entity.

State Contractor Reporting Requirements

The proposed law would require employers that contract with the state or other public bodies to provide “qualifying services” to report information regarding their employees’ compensation and hours worked broken down by “gender, race, ethnicity, and job category.” “Qualifying services” is defined as “the provision of any service to the State or to any other public body,” except for “public work,” which is defined in a separate statute and generally encompasses construction-related work paid for by public funds. Employers providing qualifying services would be required to provide a report for “each establishment” of the employer. The proposed law directs the commissioner of Labor and Workforce Development to issue a form by regulation for this reporting. It further provides that “[d]ata regarding compensation and hours worked by employees shall be reported in the form by pay bands to be established by regulation promulgated by the commissioner.” The commissioner would also be permitted to establish a standard presumption for the number of hours worked by a full-time employee or by a part-time employee for whom an employer does not track actual hours worked.

Further, employers with contracts with a public body for “public work” (which, as noted above, encompasses construction-related work paid for by public funds) would be required to provide information, through certified payroll records, regarding the “gender, race, job title, occupational category, and rate of compensation” of every employee employed in connection with the subject contract, and update this information during the contract period.

Employees who are or were employed by a state contractor “during the period of any of the contracts between the employer and any public body” would be entitled to request and receive the above information submitted by the employer, which the commissioner would be required to make available to the Division of Civil Rights and retain for at least five years following the contract. In other words, current and former employees of state contractors (or their “authorized representatives”) would have access to the reported compensation and other data from these employers.

Recommended Next Steps for Employers

Employers should consider taking the following steps before the proposed law, upon signing, becomes effective on July 1:

  • Review statewide compensation records and systems to identify positions where there is potential unequal pay for substantially similar work—even if at different physical locations—and determine whether that pay discrepancy is justified based on one of the recognized justifications.
  • Review compensation policies and job descriptions to ensure that differentiation in pay is based on a defensible factor and maintain data on how these factors informed compensation decisions.
  • Revise existing handbooks, policies, and harassment trainings to prohibit pay discrimination for substantially similar work, and prohibit retaliation against employees who request, discuss, or disclose compensation or other job-related information covered by the law.
  • Train human resources and benefits employees on the new requirements and add information about these requirements to manager training programs.

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions