NEW LAW: New Jersey Now Has The Broadest Pay Equity Law In The United States

Executive Summary: Today, April 24, 2018, New Jersey Governor Phil Murphy signed into law amendments to the state discrimination law that include sweeping pay equity protections. This amendment makes New Jersey's law one of the broadest equal pay statutes in the country. Under the new law, it is unlawful for anyone who is in a "protected class" to receive lower pay or benefits for substantially similar work, unless the employer can demonstrate this differential is based on criteria permitted under the law. Employers are also prohibited from reducing employee wages to achieve compliance with the law. Although the law provides for a six-year statute of limitations, it also adopts a continuing violation doctrine, which could make this statute of limitations irrelevant in many cases, potentially resulting in liability for numerous years. The law also provides for treble damages and prohibits the waiver of rights under the Act or the shortening of the statute of limitations by agreement. Due to the already broad nature of New Jersey's law against discrimination, this amendment further increases the potential for large scale litigation and large verdicts against employers, specifically those who fail to audit their payrolls for unintentional disparities. The law essentially requires employers to consider the adoption of uniform pay scales or face potential litigation. Interestingly, the most important term in the law, "substantially similar work," is left undefined, meaning it will need to be defined by the courts through litigation. However, the legislative intent is to make this a broader standard than equal work, which is the standard in most states.

Analysis

The bill signed by the Governor amends the state's Law Against Discrimination (LAD) and prohibits employers from discriminating against workers who are in a protected class by paying them less compensation, including benefits, than employees who are not in that class for "substantially similar work, when viewed as a composite of skill, effort and responsibility." Under the law, employers may pay employees at a different rate of compensation, but only if the employer can demonstrate that the difference is based on a seniority or merit-based system, or legitimate factors such as training, education, and experience.

Although most people assume the pay equity law was introduced to narrow the pay equity gap between women and men, this bill goes further. The amendment applies not only to gender...