On April 24, 2018, New Jersey Governor Phil Murphy signed into law the Diane B. Allen Equal Pay Act (the “Act”), which amends the New Jersey Law Against Discrimination (“LAD”). A copy of the bill’s text is available here.
Under the amended LAD, it is an unlawful employment practice for an employer to pay any employee who is a member of a protected class less than the rate paid to other employees who are not members of that protected class for “substantially similar work when viewed as a composite of skill, effort and responsibility.” Note that the Act is much broader than just remediating gender pay equity. Instead, the Act expands equal pay on the basis of membership in the protected class which includes, inter alia, race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces.
The Act does, however, carve out limited exceptions concerning when an employer may pay a different rate of compensation to members of the protected class, including if the pay differential is due to a seniority or merit based system. An employer may also pay different rates to individuals if they can demonstrate each of the following:
1. 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;
2. That the factor or factors are not based on, and do not perpetuate differential in compensation based on sex or any other characteristic of members of a protected class;
3. That each of the factors is applied reasonably;
4. That one or more of the factors account for the entire wage differential; and
5. That the factors are job-related with respect to the position in question and based on a legitimate business necessity.
Importantly, the Act also prohibits retaliation against an employee who inquires about pay information with other employees, lawyers in connection with legal advice, or government agencies. The Act goes even farther in prohibiting waivers of such inquiries as a condition of employment.
Regarding damages, the lookback period for ‘unequal’ back pay is 6 years, and “if a jury determines that an employer is guilty of an unlawful employment practice… the judge shall award three times any monetary damages to the person or persons aggrieved by the violation.”
The law goes into effect on July 1, 2018. Employers should carefully review and audit their policies, procedures, handbooks to ensure compliance.