New Jersey Governor Phil Murphy signed perhaps the strongest Equal Pay Act in the nation on April 24, 2018.  The Governor described the law as setting a “national standard” and a “strong message to employers.”  Unlike its federal counterpart, the NJ Act broadens coverage to all protected characteristics, not just gender, and extends damages to six years.

Relying upon research compiled by the National Partnership for Women and Families indicating that New Jersey women are paid 81 cents for every dollar paid to a man (resulting in a yearly pay difference of $11,737), the Act attempts to end this historic disparity.  This research also shows that women of color earn even less with African American women earning 57 cents on the dollar and Latina women just 42 cents in comparison to white men.  The Act will go into effect on July 1, 2018 giving New Jersey employers time to bring their pay practices and policies into compliance.

The highlights of the New Jersey Equal Pay Act include:

• The Act prohibits employers from discriminating against an employee who is a member of a protected class in the payment of compensation, including benefits.
• The Act applies to all protected characteristics, not just gender.
• The Act expands the damages recoverable to back pay for the entire period of the violation, up to six years.
• The Act prohibits employers from taking action against employees for discussing their pay with others.
• Employers, not employees, have to justify the differential rate by reference to a seniority system, a merit system or other bona fide factors (training, education, experience or the quality or quantity of production) provided those factors are reasonable, job-related and based on business necessity.
• For violations of the equal pay provisions, a judge may award three times the monetary damages to the person harmed by the violation.

New Jersey’s Law Against Discrimination already prohibits disparate treatment in the terms and conditions of employment, including compensation, on the basis of any protected characteristic.  However, the new Equal Pay Act is stronger, provides for treble damages, and permits a longer period of back wages (6 years), as well as prohibiting retaliation for disclosing wages. Critics of the Act challenge that it makes New Jersey inhospitable to employers, especially since the LAD and the Equal Pay Act have no capped limits on damages and provides for fee shifting for prevailing plaintiffs. 

Employers may want to prepare for this sweeping change by reviewing their compensation data, employee handbooks and policies, and any agreements that may be contrary to the provisions of this new law.