Federal Court Refuses to Apply New Jersey Equal Pay Act Retroactively

The “Diane B. Allen” New Jersey Equal Pay Act was enacted in April 2018, and made effective as of July 1, 2018. In passing the Equal Pay Act, the legislature did not expressly state that the law would be applied retroactively to claims that arise before July 1, 2018.  In September 2018, the first court decision applying the New Jersey Equal Pay Act was decided by the United States District Judge William Martini of the District of New Jersey in Perrotto v. Morgan Advanced Materials, which held that that the New Jersey Equal Pay Act should not be applied retroactively since the legislature did not specifically provide so.

Since its enactment, the New Jersey Equal Pay Act has widely been recognized as providing the strongest protections to workers of any equal pay law in the United States.  The New Jersey Equal Pay Act, which amended New Jersey’s Law Against Discrimination, prohibits discriminatory pay practices for protected classes for performing substantially similar work. The law is not limited to gender-based pay discrimination, but also includes other protected classes such as race, disability and age. Under the law, an illegal employment practice occurs every time an employee is impacted by a discriminatory compensation decision.

The New Jersey Equal Pay Act also provides for broad protections against retaliation for employees who seek redress from discriminatory pay practices. Specifically, it prohibits an employer from taking reprisals against any employee for requesting from, disclosing with, or disclosing to an employee or former employee or a lawyer from whom he or is she seeking legal advice or governmental agency for information regarding the job title, occupational category, and rate of compensation on the basis of a protected trait such as sex, race, disability, age or others.

The issue in Perrotto v. Morgan Advanced Materialswas whether the law would be retroactively applied to unequal pay claims that arose before the July 1, 2018, enactment date.  In this case, Plaintiff Darla Perrotto claimed that her employer, Morgan Advanced Materials, paid female employees less for “substantially similar work” and further retaliated against her when she complained about the pay difference. She was terminated in April 2018, prior to the Equal Pay Act’s enactment. In response to her lawsuit, Morgan Advanced Materials filed a motion to dismiss her claims because the alleged violations of the New Jersey Equal Pay Act took place prior to the law taking effect on July 1, 2018. In response, Plaintiff Perrotto asserted that the Equal Pay Act was intended to be applied retroactively.

The Court declined to agree with Plaintiff. The district court found that the New Jersey Equal Pay Act’s effective date postponement from its enactment in April to its effective date in July, evidences the legislature’s intent that the law have prospective application only. This is particularly the case in the absence of an express or implied intent by the legislature for the law to apply retroactively. Further, the New Jersey Equal Pay Act is an expansion of employee protections, the first of its kind to address pay equity.

The Court held that the New Jersey Equal Pay Act does not have retroactive application and therefore does not look back prior to its effective date. While the law does allow aggrieved employees to pursue relief from discriminatory practices that includes back pay for the previous six years of inequitable compensation, according to Perrotto, it does not permit a six-year retroactive look back at violations prior to July 1, 2018. The Court dismissed Plaintiff’s New Jersey Equal Pay Act claim with prejudice.

Our New Jersey employment lawyers will continue to monitor future case law involving the New Jersey Equal Pay Act. If you believe you are receiving unequal pay for substantially similar work, contact our New Jersey employment lawyers to discuss the facts of your situation.