New Jersey’s New Pay Equity Law Extends Protections Beyond Gender

New Jersey is the latest state to pass an equal pay equity bill. On March 24, 2018, Governor Phil Murphy signed Senate Bill 104 also known as the Diane B. Allen Equal Pay Act. A similar bill had been introduced by the New Jersey Legislature back in 2016. The equal pay and discriminatory pay practices bill would have only made it unlawful for an employer to pay an employee a wage rate less than the rate another employee of the opposite sex in the same workplace is paid for equal work. The Diane B. Allen Equal Pay Act, however, makes it unlawful to pay employees of a protected class under the New Jersey Law Against Discrimination a different rate of compensation from employees who are not members of the protected class for substantially similar work.

Under the new law, effective July 1, 2018, an employer can pay a different rate of compensation only if the employer can demonstrate:

  • that the differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class (i.e. training, education or experience, or quantity or quality of production);
  • that 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;
  • that each of the factors is applied reasonably;
  • that one or more factors account for the entire wage differential; and
  • that the factors are job-related with respect to the position in question and based on a legitimate business necessity.

The wage rate comparison must be based on wage rates in all of an employer’s operations or facilities.

An affected individual may file a complaint with the Division of Civil Rights. If the employer is found guilty of an unlawful employment practice under the law, the affected individual may be awarded three times any monetary damages. Furthermore, as stated in the text of the law, “an aggrieved person may obtain relief for back pay for the entire period of time, except not more than six year, 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 with the statute of limitations.” Employers are prohibited from requiring employees or prospective employees to consent to a shortened statute of limitations or to waive any of the protections provided by the Law Against Discrimination.

Employers have until July 1st to comply with the new law. Pay practices must be reviewed to ensure all employees performing substantially similar work are being paid equally. If pay disparities exist in the company, employers must make sure the discrepancy is justified.

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