Legal Updates for Employment Law

Top 4 Things Employers Must Do To Comply With New Jersey’s Diane B. Allen Equal Pay Act

By Ashley L. Toth, Esq. & Lary I. Zucker, Esq.

The Diane B. Allen Equal Pay Act, which Governor Phil Murphy signed into law, became effective on July 1, 2018. What does this mean for employers? The Act, which is an amendment to the New Jersey Law Against Discrimination (NJLAD), prohibits pay disparity based upon the “protected categories” enumerated under the NJLAD, including race, creed, color, national origin, nationality, ancestry, age, sex, etc. More specifically, the Act makes it an unlawful act of discrimination for an employer to pay less in wages, benefits, or compensation to members of a protected class for “substantially similar work” compared to those not in a protected class. “Substantially similar work” is not clearly defined. The Act makes clear that different rates of pay may be justified under the law by a seniority system, merit system, or other legitimate, bona fide factors such as training, education, experience, or the quantity or quality of production.

In addition, the Equal Pay Act allows employees to request, disclose or discuss among themselves information about compensation, such as information about his or her job title, occupational category, and rate of compensation of any employees or former employees. Employees have the right to know this information and employers are prohibited from retaliating against an employee who is seeking this information.

The most overarching aspect of the Act, however, is the available remedies. Under the Act, an unlawful employment practice occurs each time disparate compensation is paid to a member of a protected class -- therefore making each paycheck another instance of discrimination. Under the Act, employees who prevail in litigation against an employer can be awarded compensatory damages, attorneys’ fees, costs, punitive damages, six years of back pay and treble (three times) damages for violations.

What should you, as an employer, do to comply with the new Act?

1. Review your payroll records to be sure that there are NO disparities in pay for employees performing the same or “substantially similar work.”
2. Review job descriptions and job titles among workers doing “substantially similar work.”
3. If you do find pay disparities involving members of a protected class, you should:
   1. Determine whether the pay disparity is based upon legitimate factors, including: training, education, experience or quality/quantity of production. If so, this is a legitimate pay disparity and non-discriminatory under the Act.
   2. If however, you find that there is a pay disparity which is NOT justified, and a member of a protected class is being paid less, the law requires that the employer “fix” the disparity by increasing the pay of the lower-paid worker, not by reducing the compensation of the higher paid employee.
4. Update your company employment policies to prohibit retaliation for requesting or discussing compensation information.

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