New Jersey continues to assert its standing on strong, progressive employee rights with its new Equal Pay law. The Diane B. Allen Equal Pay Act puts our state in the lead in closing the pay gap and ending wage discrimination with the strongest equal pay legislation in the nation.
Wage discrepancies between men and women have long been an issue with numerous studies and surveys revealing the wide difference in pay between male and female workers performing the same or substantially similar jobs. The problem is further exacerbated by the fact that women hold almost two-thirds of the minimum wage jobs in the nation.
The Institute for Women’s Policy Research determined that in 2015, U.S. female workers were earning only 80 cents on the dollar compared to their male counterparts. In New Jersey, the 2016 rate was 81 cents on the male-earned dollar, according to the National Women’s Law Center (NWLC). On this trajectory of closing the pay gap, pay equality won’t be obtained nationally until 2059. New Jersey State Lawmakers sought to speed up the attainment of that goal statewide.
What the New Jersey Equal Pay Law Does
NJ Governor Phil Murphy signed the Diane B. Allen Equal Pay Act on April 24, 2018. This ground-breaking legislation will go into effect this summer on the first day of July 2018. This law moves the needle on equal pay for equal work to equal pay and benefits for substantially similar work, experience and education. This addresses the issue of varying job titles and differing departments.
To determine whether the job positions are equal or substantially similar, the law looks at important subjective factors. This includes things like comparisons on the burden of their responsibilities, the amount of operational oversight, the number of employees they each supervise, and the revenue they manage.
If it’s determined that the jobs are essentially equal, yet pay is unequal, the employer is required to demonstrate why this is through verifiable examples of inequity of experience and/or educational background. Employers may not lower the wages of higher paid employees to make pay commiserate with their counterparts who receive less compensation.
A Little Background
Federal laws – the Equal Pay Act of 1963 and the Lilly Ledbetter Act of 2009 – partially address the issue of the wage gap across the U.S., but these laws have no teeth. In New Jersey, State Senate Majority Leader Loretta Weinberg began the long arduous battle eight years ago to give the unfairly compensated employees in this state more to work with in the battle against wage discrimination.
Assemblywoman Pamela Lampitt is also one of the bill’s main sponsors.
The new law’s namesake, Diane B. Allen, was a New Jersey State Assemblywoman for two years and a state senator for 10 years, retiring in January of 2018. Her experiences with unequal pay were inspirational in the creation of the bill.
The New Jersey Law Against Discrimination (NJLAD) is the state level law addressing discrimination in the workplace. The Equal Pay Act extends the protections available under the NJLAD. For example, retaliatory action against workers for availing themselves of protections under this state law is prohibited. This type of punitive behavior will now also be barred with respect to employees who assert their rights under the new wage discrimination law. It’s also unlawful for an employer to take adverse actions against an employee for discussing their equal pay rights with co-workers, former employees, attorneys, or government agencies. This allows workers to discuss their pay, benefits, occupational category, job title and other pay equity information with others.
Wage discrimination detrimentally impacts all women, but it hits most minorities even harder. The NWLC reveals the following 2016 wage gap statistics:
- Nationwide, black women earn 63 cents for every dollar white men earn. In New Jersey, the ratio drops to $0.58:$1.00.
- For Latina women workers across the U.S. the rate is 54 cents on the white-male-earned dollar, and in New Jersey, the ratio is a staggering $0.43:$1.00.
- For Native American women, the New Jersey wage gap is $0.491, wider than the national pay gap of $0.426 for these minority female workers.
With this in mind, the new law addresses wage discrimination on a larger scale than male-female workers. As an extension of the protections against discrimination in the NJLAD, employers are prohibited from discriminating in their wage/payment policies against protected classes based on the following:
- Marital status
- National Origin
- Gender identity
- Sexual orientation
- Genetic information
Justified Reasons for Unequal Pay Under the New Law
Under the state’s new law, employers cannot pay their employees inequitably for substantially similar work unless the following applies:
- There is a seniority or merit-based system in place; or
- The difference in pay is based on training, experience, education, production quality, production quantity and/or other bona fide factors differentiating the employees receiving unequal pay;
- The applicable bona fide factors do not rely upon and don’t continue reasonings based on gender or other protected class characteristics;
- The applicable factors are applied reasonably;
- At least one of the identified bona fide factors accounts for the entire pay difference; and
- The applicable factors are related to both the job and the position in question with a basis in legitimate business requirements.
*If it’s shown that alternative business practices “would serve the same business purpose without producing the wage differential,” the bona fide factor will not apply.
This is another area where this new law distinguishes itself. It both extends the amount of potential recovery and the time plaintiffs may sue for. Workers who have a claim under the law can recover up to six years of lost wages and sue for 3 times the amount of compensation they were unfairly denied – treble damages. The federal law has a 2-year cap and damages are not multiplied.
These options are available to workers who have received inequitable pay and for those whose employer engaged in unlawful retaliatory behavior for reasons related to equal pay issues. Punitive damages are also on the table when an employer’s wrongful actions were shown to be willful.
If you have questions about this or any other New Jersey labor and employment law, turn to Castronovo & McKinney Employment Attorneys for knowledgeable answers and experienced guidance and representation. Contact us to discuss your employment law issues today.