Articles Posted in Equal Pay Act

Wage Gap in the Legal Field

The legal field is supposed to be predicated on justice, equality, and law abiding. While the legal industry should set the standard for respecting laws and providing fair treatment for employees and clients, this is not always the case.  Reports regarding cases in which law firms neglect to follow federal and state laws or allow discriminatory behavior to occur in the workplace tend to surprise many people. One area that law firms are particularly deficient in is that of pay equality. Studies as well as an abundance of recent court cases have shown that firms, particularly those in the BigLaw classification, consistently neglect to compensate their female employees equally in comparison to their male counterparts.

According to a survey conducted in 2016, male partners on average earned salaries that were 44% higher than those of female partners. The average salary of male partners in 2016 was $949,000, while females earned $656,000. Further, an article in the ABA journal states that women make up only 15% of the total amount of equity partners in law firms nationwide, meaning that 85% of these equity partners are men. This gap is typically not explainable by a difference in education or experience, and has also widened as the number of female equity partners has barely increased in recent years. A report produced by the American Bar Association contends that because compensation drives behavior, fair and equitable payment practices bear incredible importance to the success of a firm. An employee’s compensation influences their sense of self worth and how valuable they feel to their employer and therefore discriminatory pay practices are inherently damaging to both employees and their workplace. As part of an effort to increase transparency and lessen the gap in salaries, the United Kingdom has adopted a law that forces all employers with a certain amount of employees to publicly release the differences in pay between men and women. As many of the large law firms in the United Kingdom also have strong presences in the United States, the data that has been released can be used to infer the extent of these issues in our country as well. DLA Piper, for example, reported that men at the company earn 17.8% more than women on average. Norton Rose reported a similar percentage. Weil Gotshal & Manges, on the other hand, even when they removed those in secretarial roles, reported an average gender pay gap of 24.95%.

Defenders of labor rights face an uphill battle addressing the widespread abuses facing workers around the world.  Most industrialized nations have legal protections in place establishing standards for labor conditions, but in many parts of the world this is not the case. In our globalized economy, corporations in industrialized nations take advantage of this reality and set their manufacturing and production operations to those nations, to access relatively inexpensive labor.  In the worst of these cases, workers have no protections whatsoever, and live in slavery. Recently, a United States federal court took a step to hold some of these companies responsible, for being at least complicit in a system supported by slavery, as the court put it in “receiving cocoa at a price that would not be obtainable without employing child slave labor.”

Last month the Ninth Circuit Court of Appeals reversed the decision of a California District Court Judge’s in the case John Doe I, et. al. v. Nestle, S.A., et. al.  In this case, the unnamed plaintiffs allege that a group of corporate defendants in the business of processing cocoa beans were complicit in a system of widespread child slavery that occurred on cocoa plantations in the Republic of Côte d’Ivoire, a nation on the West African coast.   The plaintiffs in the case, identified only as John Doe’s I–VI, allege that they were victimized by these companies and the decisions those companies made in pursuing profits, up to and including condoning the use of child slave labor on the plantations of their cocoa suppliers.

The defendants in this case, Nestle, Cargill, and Archer Daniels Midland, are each large multinational corporations and are among the world’s largest manufacturers, purchasers, processors, and retail sellers of cocoa beans.  The plaintiffs are not U.S. citizens, but were able to file their suit in U.S. Federal Court on the basis of the Alien Tort Statute, or the “ATS.”  That statute, originally passed in the Judiciary Act of 1789, provides original jurisdiction to the federal courts for foreign citizens to seek redress for harms suffered as the result of a tort committed in violation of the law of nations. Among other torts, courts have found torture, genocide, war crimes, and slavery to be actionable under the ATS.

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

Most people know that it is against the law for employers to not pay their employees their earned wages.  But what if you are not an employee, but instead making a living as a freelance worker.  Because freelance workers are not considered employees, the laws that require employers to pay its employees their wages, such as the New Jersey Wage Payment Act and federal Fair Labor Standards Act, do not apply to freelancers.  While there are some laws such as the Independent Sales Representative Rights Act that protect independent sales representatives from not being paid their earned sales commissions, there is no specific law to protect many freelance workers. As a result, companies are far too often stiffing their non-employees from being paid their earned compensation.

New Jersey lawmakers have recognized this as a serious problem in today’s workforce and are now attempting to pass legislation to protect freelance workers from getting paid their earned compensation.  Assembly Bill No. 1526, approved on May 18, 2018, mandates that contracts between a company and a freelance worker, must now be in writing, and provides for severe penalties against companies for shirking their duty to  pay a freelance worker the compensation they are owed.

The bill requires a client to pay a freelance worker his or her compensation earned according to the work terms agreed to with the client.  If there is no agreement, payment shall be paid no later than 30 days after completion of the work or services performed.  The bill defines the term “client” to be any “sole proprietorship, partnership, corporation, limited liability company, association, other business entity or nonprofit organization in which that business has contracted with a freelance worker for compensation equal to or greater than $600.”

Governor Phil Murphy has signed into law the “Diane B. Allen Equal Pay Act”, which is rightfully being touted as the strongest equal pay law in the United States.  The New Jersey Equal Pay Act amends the New Jersey Law Against Discrimination to specifically protect employees from discriminatory pay practices.  It provides severe penalties to employers who violate the new law.

The New Jersey Equal Pay Act, which will be effective immediately on July 1, 2018, specifically prohibits employers from paying employees less than other employers because of their gender, race or other protected class.  Employers must be able to refute a claim of wage discrimination by showing that any difference in pay is based upon a seniority system, a merit system or other legitimate bona fide factors (e.g. training, education, experience, quality or quantity of work).

The new law also provides some significant changes to the applicable statute of limitations.  For example, the New Jersey Equal Pay Act strengthens the statute of limitations for claims based on pay equity to a period of six (6) years as opposed to the two (2) year statute of limitations

Less than one week from Opening Day of the major league baseball season, Congress has passed legislation that will exempt minor league baseball players from the wage protections mandated under the federal Fair Labor Standard Act (“FLSA”).  This means that Major League Baseball and Minor League Baseball will not be required to pay their minor league baseball players a minimum wage, any overtime pay, or any compensation for spring training or during the off season.

The legislation will also likely put an end to a pending lawsuit brought by minor league players in which they are attempting to gain the legal wage protections available under the FLSA.  The lawsuit was filed in 2014 by lead plaintiff and former minor leaguer, Aaron Senne, who argued on behalf of himself and other minor league baseball players, that Major League Baseball and Minor League Baseball were violating the FLSA by not paying the players minimum wage and overtime pay.  Most minor league players make less than $7,500 a season and work between 50-60 hours a week during the season without factoring in travel time.  Minor league games take place six to seven days a week and require extensive travel for the players.

The FLSA requires that employers pay covered employees no less than $7.25 for every hour worked.  Most states have similar minimum wage laws in place, such as New Jersey that has enacted the New Jersey Wage and Hour Act.  The New Jersey Wage and Hour Act currently mandates employers pay eligible employees a minimum wage of $8.60 per hour.  The FLSA also requires that employers pay covered employees overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.  The New Jersey Wage and Hour law contains the same provision requiring employees provide eligible employees with overtime compensation.

The New Jersey Legislature passed legislation this week that mandates equal pay to all New Jersey employees and penalizes New Jersey employers who discriminate against women and other protected classes in their paychecks. The bill has now been sent to Governor Murphy, who has made clear that he will imminently sign the bill into law.

The bill, entitled the Diane B. Allen Equal Pay Act, is named after state senator Diane B. Allen who left her broadcasting job in 1994 after filing gender and age discrimination complaints with the Equal Opportunity Employment Commission.   The New Jersey Equal Pay Act will modify the New Jersey Law Against Discrimination by strengthening the protections already provided by the current anti-discrimination law against employment discrimination by making it unlawful to discriminate against employees in their compensation.

Specifically, the New Jersey Equal Pay Act makes it an unlawful for an employer to pay a rate of compensation and benefits to employees of a protected class which is less than the rate paid to employees not in the same class for substantially the same work. Protected classes include such traits as sex, race, ethnicity, military status or national origin of the employee.  Once it is signed into law, the New Jersey Equal Pay Act will prohibit an employer from reducing the rate of compensation of any employee to comply with the new law.  This means that an employer who has been and continues to be in violation of the law cannot then decrease the compensation of any employee to the compensation of another employee who is being discriminated against in their compensation.