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
for other discriminatory actions that violate the New Jersey Law Against Discrimination. This will allow an aggrieved employee to recover all back pay from a discriminatory pay practice for up to six (6) years, which is longer than the federal Equal Pay Act of two (2) years. In addition, employers will not be permitted to require employees or applicants to waive any rights they enjoy under the New Jersey Law Against Discrimination or require them to shorten the applicable statute of limitations.
The New Jersey Equal Pay Act will also expand the existing New Jersey Law Against Discrimination’s anti-retaliation provisions. In addition to other acts of forbidden employment retaliation, it will now be against the law for an employer to take any adverse employment action against an employee because he or she sought legal advice regarding any rights under the New Jersey Law Against Discrimination or shares relevant information with legal counsel or a government entity. The new law will also forbid retaliation action for employees who discuss or disclose potential discrimination treatment concerning pay and other compensation.
In perhaps the most significant part of the new law, the New Jersey Equal Pay Act will provide for treble damages for equal pay violations. This means that an aggrieved employee can recover up to three times the proven annual pay disparity in addition to back-pay damages and punitive damages.
New Jersey will now clearly be leading the entire country to pay equality with the passing of the New Jersey Equal Pay Act. Employers will be well advised to change their policies immediately, and certainly before July 1, 2018, as this new law is a major game changer for New Jersey employees.