New Jersey’s New Equal Pay Act – This is Big!

It has been 6 months since New Jersey’s Diane B. Allen Equal Pay Act (the “Act”) took effect. On March 27, 2018, the New Jersey legislature passed the Act, amending the New Jersey Law Against Discrimination (“LAD”). The LAD has long been New Jersey’s law for promotion of equal pay and against employment discrimination. 

The Act specifically makes it an unlawful employment practice for an employer to pay an employee who is a member of a protected class less than other employees who are not members of that same protected class for work that is “substantially similar . . . when viewed as a composite of skill, effort and responsibility.” In short, the law is aimed at protecting against employees of different classes being paid less than those of another class for the same work. It is much broader than other laws, such as the federal Equal Pay Act of 1963, 29 U.S.C. §206(d) or the Lilly Ledbetter Fair Pay Act of 2009, 42 U.S.C. §2000e-(5)(e)(3)(a), and other state laws. 

Many of these laws advocate for gender pay equality, but the Act expands this protection. It is aimed at “protected classes,” which is defined as a “group of people with a common characteristic who are legally protected from employment discrimination on the basis of that characteristic.” This can include anything from race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, pregnancy or breastfeeding, and disability among many others. The Act therefore protects individuals from disparate treatment based on any of these classes. 

The Act is not unlimited though, and offers specific instances in which different compensation is permitted, based upon:

1. Seniority; 
2. Merit; or
3. One or more legitimate factors such as training, education, experience or any kind of quality or quantity measurement. 

In seeking protection under the 3^rd scenario, the legitimate factor, an employer must show that: i) the difference in wages is not based on a protected characteristic such as race or gender; ii) each factor is applied reasonably; iii)  one or more of the factors account for the wage difference in whole; and iv) the factors are related to the job position. 

The Act has other notable revisions as well. Under the LAD prior to the addition of the Act, there was a two (2) year statute of limitations; The Act has amended it to six (6) years. This means that an employee can seek back pay for a period of 6 years, and can file a claim 6 years after the alleged event. This significantly extends the window to file a claim for this type of employment discrimination. Moreover, a judge or jury can award treble damages for violations of the Act. Treble damages, or damages that can amount to triple the amount of actual damages suffered, are available in instances where an employer tries to retaliate against an employee for requesting or disclosing to another employee, a lawyer, or any other government agency his or her belief in the violation. 

The passage of the Act could have a huge impact on employers and employees alike.     Women are paid 82 cent for every dollar paid to their male counterparts, and the disparity in numbers for non-white women is even larger. So far, there have been few claims filed under the Act. Only time will tell how these and future claims are dealt with.