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New Jersey Equal Pay Act Takes Effect Today

The United States has historically been plagued by systematic employment discrimination based on protected characteristics that often take the form of unjustifiable wage disparity. The Diane B. Allen New Jersey Equal Pay Act attempts to curb this practice in New Jersey by placing strict regulations in situations where employers pay their employees disparate wages, and imposing large penalties on employers who violate this statute. Governor Phil Murphy signed the bill into law on April 24, 2018 in hopes of creating a work environment in the state that fosters pay equity. It takes effect, today, July 1, 2018.

The Equal Pay Act amends the New Jersey Law Against Discrimination to strengthen protections against discrimination by specifically prohibiting unfair pay practices based on gender, race, or other characteristics. It restricts employers from paying employees who are members of protected classes reduced wages in comparison to non-protected class employees by making it unlawful for women to be paid less than their male counterparts simply because of their gender. An employer may utilize differing compensation rates only pursuant to:

  • A seniority or merit system
  • Legitimate, bona fide factors other than protected characteristics
  • Factors that do not perpetuate gaps in wages based on sex or other protected characteristics
  • Factors that are applied reasonably and account for the entire wage gap
  • Factors that are related to an individual’s employment or based on a legitimate business necessity. This business necessity will not be sufficient if there are lawful alternative practices that could serve the same purpose without creating a gap in pay.

If a wage gap does not adhere to one of these options, then it is unlawful. Under the bill, an illegal employment practice occurs every time an employee is impacted by a discriminatory compensation decision. The bill allows aggrieved employees to pursue relief from such practices that includes back pay for the previous six years of inequitable compensation. If an employer is found guilty of an unlawful employment practice, a judge may award compensation that is three times the amount of any accumulated monetary damages to the employee. This aspect of the bill is particularly harsh on individuals who violate it, serving to firmly dissuade employers from paying their female or other protected class employees less than their male, unprotected counterparts.

The bill additionally pursues its goal of wage equality by expanding transparency of pay and access to other employment details. The bill makes it is unlawful to require employees to sign documents that waive their rights to request details about compensation or disclose personal information about their jobs. The bill further requires public contractors to report employment information such as compensation and hours worked by employees, categorized by gender, race, ethnicity, and job type. Regarding the prohibition of retaliation, the bill explicitly restricts employer behavior that is retaliatory against employees who seek more information about the fairness of their compensation from coworkers, former employees, lawyers, or any governmental agency. It forbids employers from punishing, intimidating, or coercing individuals who seek legal advice regarding their employment situation or who file a complaint addressing illegal compensation practices.

This comprehensive statute will mark New Jersey as a leader in equal pay legislation. The allowance of up to six years of back pay damages is particularly unprecedented and will serve to strongly deter employers from maintaining inequitable compensation practices.