As of July 2018, the Diane B. Allen Equal Pay Act is now in effect. This Act expanded the New Jersey Law Against Discrimination (LAD) in an aggressive manner designed to foster equal pay for women and other members of classes protected under the LAD. Employers must adopt specific rules requiring equal pay for equal work. Additionally, state contractors are subject to the new reporting requirements.
Under the Equal Pay Act, it is unlawful to pay any employee who is protected by the LAD "at a rate of compensation, including benefits, which is less than the rate paid by the employer to employees who are not members of the protected class for substantially similar work, when reviewed as a composite of skill, effort, and responsibility." Remarkably, the Act places the burden on the employer to disprove discrimination. Any rate differential between similar situated employees is presumed to be discriminatory unless the employer can prove that the differential is due to legitimate reasons such as a seniority system or merit system.
The employer may also be protected if:
- The pay differential is based on one or more legitimate, bona fide factors, such as training, education, experience, or the quantity/quality of production;
- The factor(s) are not based on, and do not perpetuate, a differential in compensation based on any characteristic of members of a protected class;
- It applies each of the factors reasonably;
One or more of the factors account for the entire wage differential; and
- The factors are job-related with respect to the position in question and are based on a legitimate business necessity.
This means that employers must determine whether wage or benefit rate differentials exist in all of their operations and facilities. When employers make pay adjustments to achieve compliance, they may not reduce any employee's wages or benefit rate.
The Act's protections cannot be waived. Unsurprisingly, the Act protects employees from retaliation based on their protected activity under the Act, including when they seek, share, or discuss legal advice or information regarding employee rights under the Act.
An offense occurs each time an employee is affected by a discriminatory compensation practice or decision. In other words, the statute of limitations as to each unlawful paycheck starts to run as of the date of each check. Generally, a six-year statute of limitations applies. But there is also a continuing violation concept built into the Act, enabling employees to make claims for actionable conduct outside of the limitations period as long as part of the violation occurred during the limitations period.
Employers have good reason to be proactive in addressing their pay practices since violations as well as retaliation can give rise to treble damages (as well as the right to recover the employees' attorney fees).
Employers that contract with the state of New Jersey (or any agency/instrumentality of the state) should also be aware that they now must provide reports to the State Commissioner of Labor and Workforce Development detailing information on their employees' compensation and hours worked.
All employers are urged to start planning their assessments of compensation practices and adopting revisions as necessary. Lewis Brisbois' New Jersey employment attorneys are available to assist.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.