New Jersey Pay Equity Law – What You Need to Know
Ready or not, New Jersey just passed an aggressive equal pay law and employers need to take notice.
On April 24, 2018, a bill was passed making New Jersey’s pay equity law among the most comprehensive in the nation.
After years of vetoes by his predecessor, Governor Phil Murphy signed into effect the Diane B. Allen Pay Equity Act (Allen Act), a bill named after a former New Jersey state Senator who was a victim of pay discrimination. This law amends the New Jersey Law Against Discrimination (LAD) to significantly expand pay equity protections for New Jersey employees.
While the Allen Act had been championed primarily as gender pay equity legislation, its equal pay provisions are much broader and encompass all protected classes under the LAD.
“Equal pay for equal work” is now “Equal pay for similar work”
Starting July 1, 2018, all protected classes must earn the same pay, and the same benefits, for similar work. A “protected class” is broadly defined to include race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for military service, and mental or physical disability, perceived disability, and AIDS and HIV status.
Employment attorneys are salivating
The new law offers fertile ground for litigation. Determining whether pay equity exists across protected classes performing similar work will be a significant burden for New Jersey employers. Loose interpretation of the law’s vague “substantially similar work” will make it easier for employees to make discrimination claims.
These claims can result in hefty penalties: Employees can sue for up to six years of back pay, plus damages to three times as much as claimants were denied in compensation. In addition, each paycheck that contains an unequal pay rate counts as a separate act of discrimination and resets the statute of limitations.
Are you prepared?
Now is the time to examine your compensation and hiring practices. The law permits certain pay disparities—employers can pay employees different rates if that difference is based on a seniority or merit-based system—but the responsibility is on you to prove that any disparities are lawful. You will need to maintain documentation to justify these differences and be financially prepared to increase the pay of lower paid workers, if necessary, to comply.
The law protects employees, you need to protect your business.
There’s a lot to consider when it comes to this extensive law. Balance Point has a full-suite of solutions to help you navigate it successfully. Our high-touch HR consulting service, BPHR, gives you access to compensation and compliance experts. We can help audit pay policies, identify discrepancies, and guide you through your options to ensure your adherence.
Our cloud-based human capital management (HCM) system stores and maintains all employee data in once place and is accessible 24/7. An executive dashboard provides you with a snapshot of your workforce’s demographic makeup, jobs titles and compensation packages in real-time. Standard and ad-hoc reporting capabilities allow you to run reports that are necessary to analyze the data and make critical decisions.
Schedule a consultation with one of our Human Capital Management experts to learn more and how to protect your business.