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New Jersey is Poised to Enact a Sweeping Pay Equity Act

March 29, 2018

The pending New Jersey Equal Pay Act may be the strongest act among all the states and exceeds the protection of the federal Lilly Ledbetter Equal Pay Act.  New Jersey’s Senate voted unanimously to approve the Diane B. Allen Equal Pay Act and the Assembly passed the Act with a vote of 74-2.  New Jersey Governor Phil Murphy has indicated he will sign the Act when presented to him for approval. 

The highlights of the New Jersey Equal Pay Act include:

  • A finding of an unlawful employment practice where an employer discriminates in compensation, or the financial terms or conditions of employment.
  • The Act applies to all protected characteristics, not just gender.
  • The Act expands the damages recoverable to back pay for the entire period of time that the violation has occurred, up to six years.
  • The Act preserves the “continuing violation” and “discovery rule” doctrines under New Jersey’s common law, which may expand the length of time that an unlawful employment practice will be deemed to have occurred.
  • The Act makes it an unlawful employment practice to require employees to agree to a shorter period of limitations than that provided by New Jersey’s Law Against Discrimination or to waive any of the protections provided under the LAD. 
  • Employers may justify a differential rate of compensation, including benefits, only upon a demonstration that the differential is based on a seniority system, a merit system or bona fide factors (training, education, experience or the quality or quantity of production) provided those factors are reasonable, job-related and based on business necessity.
  • For violations of the equal pay provisions, a judge will award three times the monetary damages to the person harmed by the violation.

State contractors, regardless of location, will be required to submit compensation reports to the Commissioner of Labor and Workforce Development that will include compensation data organized by gender, race, ethnicity, job title, and job category, and the total compensation of all employees within New Jersey working on the contract. 

Employers may want to prepare for this sweeping change by reviewing their compensation data, employee handbooks and policies, and any agreements that may be contrary to the provisions of this new law. Please feel free to contact me if you would like assistance in reviewing your pay practices.

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