Are New Equal Pay Claims on the Horizon in New Jersey?

Are New Equal Pay Claims on the Horizon in New Jersey?

The New Jersey Legislature is again working to enact new equal pay requirements. Like prior versions, the proposed legislation is modeled after the federal Lilly Ledbetter Fair Pay Act of 2009.

Earlier this month, the Senate Labor Committee recommended passage of the proposed New Jersey employment legislation, Senate Bill 104. It is sponsored by Sen. Loretta Weinberg, D-Bergen, and Senate President Stephen Sweeney, D-Gloucester. 

NJ Equal Pay and Employment Discrimination Legislation

SB 104 aims to strengthen protections against employment discrimination and promote equal pay for all groups protected from discrimination by the New Jersey Law Against Discrimination (NJLAD). Below are several key provisions:

• Pay Discrimination: The bill amends the NJLAD to make it an unlawful employment practice for an employer to discriminate against an employee because the employee is a member of a class protected against discrimination by the LAD, by paying a rate of compensation, including benefits, to employees of a protected class less than the rate paid to employees not of the class for substantially similar work, when viewed as a composite of skill, effort and responsibility.
• Allowable Wage Differentials: SB 104 also prohibits any employer paying a rate in violation of the bill from reducing the rate of compensation of any employee in order to comply with its provisions. The bill does allow an employer to pay a different rate of compensation if the employer demonstrates 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 or other characteristics of members of a protected class, such as training, education, experience, or the quantity or quality of production, 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 differential based on sex or other characteristic of members of a protected class, are job-related and based upon legitimate business necessities.
• Anti-Retaliation Provision: The proposed legislation bill also amends the LAD to ban an employer from taking reprisals against an employee for discussing with, or disclosing to, other employees or former employees, attorneys, or government agencies, 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.
• Damages for Violations: Under the bill, employers found to have violated its provisions may be liable for treble damages. The pay equity legislation further provides that a discriminatory compensation decision or other employment practice that is unlawful under the LAD occurs each occasion that compensation is paid in furtherance of that discriminatory decision or practice. Accordingly, the provision restarts the applicable statute of limitations governing discriminatory compensation claims under the LAD, effectively making each paycheck another instance of the discriminatory compensation decision or other practice and therefore a new or continuing violation. In addition, the bill provides that liability accrues and an aggrieved person 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.
• Statute of Limitations: The bill provides that nothing in the LAD will prohibit application of the doctrine of “continuing violation” or the “discovery rule” to any appropriate claim as those doctrines currently exist in New Jersey common law. 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.
• Reporting Obligations: An employer entering into a contract with the State must provide information concerning every employee employed in connection with the contract, including information regarding the employee’s gender, race, job title, occupational category, and total compensation, and report specified significant changes in employee status during the contract. The Commissioner of Labor and Workforce Development is required to retain and make the information available to the Division of Civil Rights, and, upon request, employees and their authorized representatives. 

Likelihood of Passage

New Jersey lawmakers have passed similar legislation in the past. However, Gov. Chris Christie declined to sign it, most recently objecting to the lack of a damages cap. “As I expressed previously when a similar provision reached my desk, unlimited back pay for wage discrimination clearly departs from well-established law,” Christie wrote in his veto message. “There is no reason for our law to go beyond the Lilly Ledbetter Act; the sponsors should not object to matching the federal law they so often cite as a model.”

To the contrary, Gov. Phil Murphy has signaled that pay equity is a top priority of his administration. In January, Gov. Murphy signed an executive order intended to address equal pay and gender equity at state agencies. Under Executive Order 1 (EO1), state agencies and offices are expressly banned from asking a job applicant for their past wage history or investigating the prior salaries of their applicants, unless required by law.

The Scarinci Hollenbeck Labor & Employment Group will continue to track the status of Senate Bill 104. New Jersey employers that are concerned about how the provisions may impact their operations are encouraged to consult with experienced counsel.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Jorge R. de Armas or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.