A Review of the 2018 New Jersey Pay Act

The Diane B. Allen Equal Pay Act is an amendment to the New Jersey Law Against Discrimination (NJLAD). The amendment became effective July 1, 2018, just over two months after the legislation was signed by the governor. Since that time, employers have been scrambling to review and evaluate the legislation’s impact and actions necessary to comply. In some respects, the New Jersey amendment follows a pattern also seen in other recent state pay laws. For example, broadening the evaluation from “equal work” to “similar” or “comparable” work and broadening the geography associated with potentially comparable employees outside of individual establishments. Additionally, it is not uncommon for these laws to require employers to explain the “entire wage differential” and to limit permissible explanations or defenses for differentials that do exist. However, the New Jersey Act is notably different in three main areas: 1) the number of protected classes, 2) the defenses available for employers, and 3) the statute of limitations.

One of the first notable differences between this Act and others at the federal or state level, is the sheer number of protected classes covered. All classes protected by the broader NGLAD are also covered under the new Equal Pay Act: 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 because of the liability for service in the Armed Forces of the United States or the nationality of any individual, or because of the refusal to submit to a genetic test or make available the results of a genetic test to an employer. Thus, to evaluate whether all employees are paid equally, both in terms of wages and benefits, an employer must determine which employees fall into one or more of these protected classes and also what positions require substantially similar work, as a composite of skill, effort and responsibility.

A second notable difference in this Act and others is the number of defenses set forth as options for employers. This Act provides for three, whereas other state and federal pay legislation define at least four. The three defenses are: 1) seniority system, 2) merit system, or 3) differences are based on one or more legitimate bona fide factors other than protected characteristics and those factors meet four additional criteria. The four additional criteria are: i) the factor(s) are not based on and do not perpetuate differences based on protected characteristics, ii) the factor(s) are applied reasonably, iii) the factor(s) account for the entire differential, and iv) the factor(s) are job-related and based on legitimate business necessity, unless it’s demonstrated that alternative business practices would serve the same purpose without producing the differential.

A third notable difference is this Act’s six year statute of limitations, compared with two years for most other similar laws. Further, the statute of limitations restarts each time an employee is paid, and aggrieved persons may obtain back pay relief for the entire time period. Given the speed with which the Act went into effect after being signed, there is a lack of clear guidance regarding implementation requirements, and it remains to be seen how specific aspects will be interpreted in the courts. Stay tuned!

By Kristen Pryor, Associate Principal Consultant, and Emilee Tison, Associate Principal Consultant, at DCI Consulting Group

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