On April 24, 2018, New Jersey joined the list of states to pass equal pay legislation. While similar to the federal Equal Pay Act, New Jersey’s equal pay law will extend legal protections beyond gender and provide relief to all classes of employees protected under the state’s anti-discrimination law.
Named for the state legislator who advocated for women’s rights and equal pay for over twenty years, The Diane B. Allen Equal Pay Act will go into effect on July 1, 2018.
Equal Pay in New Jersey
The Diane B. Allen Equal Pay Act makes it an unlawful employment practice “[f]or an employer to pay any of its employees who is a member of a protected class 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 viewed as a composite of skill, effort and responsibility.”
An employer found to have violated the Act with respect to its compensation practices is liable for treble damages – three times the amount of any monetary award determined to be owed to the employee. That’s right, three times.
Of course, there are exceptions to the Act’s requirements. Employers may compensate similarly situated employees differently if the differences are a result of seniority or merit-based systems, or if the employer can demonstrate the following:
- The pay differential is based on one or more legitimate, bona fide factors such as training, education, or experience, or quantity or quality of work produced;
- The factor(s) 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; and
- The factors are job-related in regards to the position in question and based on a legitimate business necessity (a factor is not based on business necessity if there are alternative business practices that would serve the same business purpose without producing the wage differential).
What Are Protected Classes?
While New Jersey’s existing state wage and hour law prohibits discrimination based on sex, the new equal pay law expands protection to include all “protected classes.” The list of protected classes in New Jersey is expansive. It includes, among other classes:
- Affectional or sexual orientation
- Gender identity or expression
- Disability or atypical hereditary cellular or blood trait of any individual
The complete list of protected classes is outlined in the New Jersey Law Against Discrimination (LAD).
How Can I Prepare?
As the law will go into effect on July 1, 2018, it’s best to review any and all of your company’s pay policies and practices to ensure compliance with the law. Consider auditing pay data to evaluate and remedy, as needed, any pay differentials that are based on membership in one of the protected classes.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.