Orrick, Herrington & Sutcliffe LLP

After years of failed attempts at equal pay legislation, New Jersey has now passed a historic equal pay law. Notably, the Diane B. Allen Equal Pay Act (“Equal Pay Act”) becomes the strongest measure attempting to close the gender pay gap in the country.

Though multiple bills were passed in New Jersey in the last several years, then-Governor Chris Christie vetoed such measures, arguing that they were unfriendly to businesses and a threat to the economy. The tide changed, however, when Governor Phil Murphy took office in January of this year. In his first official act after being sworn in, Governor Murphy signed an executive order prohibiting state entities from inquiring about a job applicant’s current or previous salary before making a conditional offer of employment. At the signing, Governor Murphy emphasized his commitment to closing the pay gap by stating:

Today, New Jersey takes the first meaningful step towards gender equity and fighting the gender pay gap. This concept is the cornerstone of our efforts to build a stronger and fairer economy of New Jersey.

The Equal Pay Act amends New Jersey’s Law Against Discrimination in several ways. Most importantly, it contains broader protections than the federal Equal Pay Act by prohibiting employers from providing unequal pay to employees for “substantially similar work” when viewed as a composite of skill, effort and responsibility. Additionally, unlike the federal Equal Pay Act and many state equal pay laws, the New Jersey law is not limited to gender.  Protected characteristics also include race, national origin, age, sexual orientation, gender identity or expression and disability, among others. Also going beyond federal law, different rates of pay may be justified under the New Jersey law by a seniority system, a merit system, or legitimate, bona fide factors other than sex – or the characteristics of the members of the protected class – such as training, education, experience or the quantity or quality of production. The factor(s) must not, however, be based on and/or perpetuate a differential in compensation based on sex or any other characteristic of members of a protected class. In addition, the factor(s) must be applied reasonably, must account for the entire wage differential, and must be job-related and based on legitimate business necessity.

In addition, the Equal Pay Act prohibits employers from retaliating against an employee for requesting, disclosing or discussing information about compensation, such as information about the job title, occupational category, and rate of compensation of any employees or former employees. Moreover, an employer may not require an employee or prospective employee, as a condition of employment, to waive such rights.

The most far-reaching aspect of the Equal Pay Act comes in the form of remedies. Following the federal Lilly Ledbetter Equal Pay Act, the statute of limitations restarts for each instance of discrimination, effectively making each paycheck another instance of potential discrimination. However, the New Jersey law goes beyond the two-year federal cap – and most state equal pay acts – and provides for relief for back pay for the entire period of time in which the violation has been continuous, if the violation continues to occur within the statute of limitations, for up to six years. Additionally, prevailing plaintiffs are entitled to three times any monetary damages awarded for violations of the equal pay and retaliation provisions.

Finally, the Equal Pay Act requires transparency in state contracting. Specifically, the measure requires contractors to provide information concerning compensation and hours worked by employees based on gender, race, job title, and occupational category. Such contractors are then required to report certain changes to such information during the course of the contract.

The New Jersey Equal Pay Act will become effective July 1, 2018.

×