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New NJ Equal Pay Laws Will Impact Monmouth Employers


March 14, 2016
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Amendments to NJ Equal Pay Law Will Impact Monmouth County Employers

Proposed changes to New Jersey’s Equal Pay Law are currently moving through the Legislature. If they become law, Monmouth County employers will face additional liability under the New Jersey Law Against Discrimination (LAD). New Jersey’s Equal Pay Law currently bans discrimination in the rate or method of payment of wages to an employee because of his or her sex. Senate Bill 992 aims to increase the protections against pay discrimination and close the wage gap between men and women. Below are several key provisions of the proposed amendment, which has cleared the Senate and is currently moving through the Assembly.

Pay Differentials

The bill would make it an unlawful employment practice in New Jersey for an employer to discriminate between employees on the basis of sex by paying a rate of compensation, including benefits, to employees of one sex less than the rate paid to employees of the other sex for substantially similar work, when viewed as a composite of skill, effort and responsibility. The proposed legislation also prevents employers from reducing the rate of compensation of any employee in order to comply with the amended law. When pay disparities do occur, the burden would be on the employer to demonstrate that the differential is made pursuant to a seniority system or a merit system, or is based on legitimate, bona fide factors other than sex, such as training, education, experience, or the quantity or quality of production. Employers must also show that each factor is applied reasonably, that one or more of the factors account for the entire wage differential, and that the factor or factors do not perpetuate a sex-based differential in compensation, are job-related and based upon legitimate business necessities.

Continuing Violations

Under the proposed measure, a discriminatory compensation decision occurs each time the employee is paid. Accordingly, the provision restarts the applicable statute of limitations governing discriminatory compensation claims under the LAD, effectively making each paycheck a new or continuing violation.  In addition, the proposed amendment provides that aggrieved workers may obtain 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. The bill also makes it a violation of the LAD for an employer to require an employee to agree to any reduction of any applicable statute of limitation.

Retaliation

Finally, Senate Bill 992 also amends the LAD to prohibit an employer from retaliating against an employee for disclosing information about job titles, occupational categories, rates of compensation, gender, race, ethnicity, military status, or national origin of employees or former employees.  It also prohibits an employer from requiring, as a condition of employment, any employee or prospective employee to waive rights under the law.

Steps to Boost Compliance

On the federal level, pay disparity is also hot topic in employment law. As recently discussed on this blog, the Equal Employment Opportunity Commission will begin requiring companies to provide pay data on EEO-1 Forms in 2017. Given the increased scrutiny, Monmouth County employers should review their wage polices and procedures to identify any practices that could be construed as discriminatory. Employers should also verify that all wage decisions are documented in writing and based on a legitimate, business necessity.