New Jersey Governor Phil Murphy signed into law comprehensive equal pay legislation amending the New Jersey Law Against Discrimination (the “NJLAD”), titled the Diane B. Allen Equal Pay Act (the “Act”).

Effective July 1, 2018, the Act will make it unlawful for employers to discriminate against employees who are members of any protected class by paying them less compensation (including benefits) than those employees not in a protected class for “substantially similar” work when viewed as a composite of skill, effort and responsibility.

Employers are not permitted to reduce the rate of any employees in order to comply with the Act.

The Act permits a pay differential only if the employer demonstrates that the differential results from a seniority system, a merit system, or the employer demonstrates that:

  • 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(s) are not based on and do not perpetuate a differential in compensation based on any characteristic of protected class members;
  • Each factor is applied 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, based on a legitimate business necessity, and there are no alternative business practices that would serve the same business purpose without producing the differential.

Comparisons of wage rates may be based on pay rates in all of an employer’s operations or facilities.

The Act also prohibits retaliation for discussing or disclosing to others information related to compensation and compensation differentials; including discussion with other employees, former employees, an employee’s attorney, or government officials.

Remedies and Statute of Limitations

The Act provides that a violation occurs each time an employee is affected by a discriminatory compensation decision or practice (i.e., with each paycheck). Aggrieved employees may be entitled to up to six years of back pay for violations of the Act. Moreover, if a violation is found, a court must award triple the amount of damages.

The Act prohibits employers from requiring employees or prospective employees to consent to a shortened statute of limitations or to waive protections provided by the NJLAD.

State Contractor Reporting Requirements

The Act also contains reporting requirements for employers who enter into a contract with a public body.

What Should Employers Do?
New Jersey employers should review their compensation practices and policies to ensure compliance with this new law.

If you have any questions about the new law, or need assistance auditing your compensation practices, please contact Katherin Nukk-Freeman or the Nukk-Freeman & Cerra, P.C. attorney with whom you normally work.
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