NJ Mandates Equal Pay for All

On April 24, 2018, New Jersey Governor Phil Murphy signed into law the Diane B. Allen Equal Pay Act, an amendment to the Law Against Discrimination (LAD), which takes effect on July 1, 2018. The Act prohibits an employer from paying an employee who is a member of a protected class (as defined under the LAD) at a rate of compensation less than the rate paid to employees who are not members of the protected class for “substantially similar work.”

This equal pay requirement, which incorporates more than 15 protected classes, is far broader than those found in most parallel state laws, which mandate equal pay on the basis of sex only. The Act provides for a six-year statute of limitations for violations of the equal pay requirement, and specifies that a violation occurs on each occasion that compensation is paid.

An employer may pay a different rate of compensation only if it can demonstrate that the differential is (1) made pursuant to a seniority system, (2) made pursuant to a merit system, or (3) based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class and that such factors meet a number of other criteria. To comply with the law, employers cannot reduce any employee’s compensation. Furthermore, an evaluation of the employer’s compensation practices should include a comparison of its wage rates across all of its operations and facilities.

The Act also prohibits employers from retaliating against an employee who requests from, discusses with, or discloses to current or former employees, a lawyer, or a government agency, information regarding compensation practices of the employer. Employers are further prohibited from requiring current or prospective employees to agree not to make such requests or disclosures. A violation of these prohibitions, as well as the equal pay requirement, subjects employers to treble damages.

The Act provides for other significant changes to the LAD, including:

  • prohibiting employers from requiring current or prospective employees to waive any protection under the LAD or shorten the LAD’s statute of limitations
  • expanding the anti-retaliation prohibition to include when a person seeks legal advice regarding rights under the LAD, shares relevant information with an attorney, or shares such information with a governmental entity
  • requiring employers that contract with a public body to report information to the Commissioner of Labor and Workforce Development regarding the compensation and hours worked by employees categorized by gender, race, ethnicity, and job category

Employers should take steps to comply with and minimize the risk of potential litigation under the Equal Pay Act.

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