What Does the Diane B. Allen Equal Pay Act Mean for Employers?

Apr 24, 2018 | Written by: Benedict F. Valliere, Esq. | Share

Governor Phil Murphy recently signed into law the Diane B. Allen Equal Pay Act (the Act).[i]  This law, among other things, expands New Jersey’s Wage and Hour Law from outlawing discrimination based on sex, to outlawing discrimination in pay based on all protected classes under existing New Jersey Law.  The Act, which takes effect July 1, 2018, will undoubtedly have a significant impact on employers, both public and private.

First and foremost, the Act redefines an unlawful employment practice as “each occasion that an individual is affected by application of a discriminatory compensation decision or other practice,” a definition that includes each paycheck issued while the discrimination is ongoing and treats each paycheck as an individual Unlawful Employment Act (UEA).  The Act further defines these UEAs and uses them to augment the existing Law Against Discrimination.  It allows liability for these continuing UEAs to accrue and makes the employer liable for back pay for the discrimination for a period of up to six (6) years. 

The act also places several new limitations on employers.  Specifically:

1. Employers are prohibited from requiring employees or prospective employees to consent to a shortened statute of limitations or to waive any of the protections of the Law Against Discrimination.
2. Employers may not require employees or prospective employees to sign a waiver or agree not to make requests or disclosures as to job titles, occupational categories, rates of compensation or other benefits.
3. Employers are prohibited from reprisals against employees, not only if they file a complaint but also if they merely seek legal advice, share relevant information with legal counsel, or share information with a government entity.
4. Employers are also prohibited from reprisals against employees for speaking with other employees, attorneys, or government agencies regarding job titles, occupational categories, rates of compensation, or other benefits.

The Act also specifically outlaws an employer paying members of a protected class less than what the employer pays those who are not members of the protected class for “substantially similar work.”  Substantially similar work is determined “when viewed as a composite of skill, effort and responsibility.”  The law further outlaws pay cuts to any employee to comply with this act, so employers cannot simply cut the pay of the higher paid employees to comply with these new requirements under the Act. 

Employers are permitted to pay different compensation to employees if done based on a seniority system, a merit system, or if they can prove that:

1. Differences in pay relate to one or more legitimate bona fide factors other than the characteristics of members of the protected class, including training, education or experience, or the quantity or quality of production;
2. The factors are not based on or do not perpetuate differentials in compensation based on characteristics of members of a protected class;
3. Each of the factors is applied reasonably;
4. One or more of the factors account for the entire wage differential; and
5. The factors are job-related with respect to the position in question and based on a legitimate business necessity. Business necessity does not apply if there are alternative business practices that would serve the same purpose without a wage differential.

The Act also includes a reporting requirement in which any employer who provides services to a public body must provide a report to the Commissioner of Labor and Workforce Development regarding compensation and hours worked by employees categorized not only by gender and race, as before the passage of the act, but also now with respect to ethnicity and job category.  Employers will be required to provide compensation data including hours worked by employees in the form of pay bands, the specific form of which will be established by regulation to be promulgated by the Commissioner.  Employers must provide a report for each of their facilities.

Of important note to employers, any employee who is found to be discriminated against by an employer under this act is entitled to treble (triple) damages.

Nearly all employers will be affected by the new law.  Employers should confirm that their compensation structure complies with the new law.  Failure to have in place a merit system, seniority system, or other system that considers bona fide job-related factors in determining compensation risks running afoul of the Act.  Employers may not decrease pay of higher-paid employees to comply with the act.  Violation of the Act will be expensive for employers, whether willful or accidental. 

Our firm is happy to work with any employer regarding specific concerns about the new law.  Please feel free to call us at 908-735-5161.

[i] S. 104 (2018).  http://www.njleg.state.nj.us/2018/Bills/S0500/104_R2.HTM, Accessed 4/2/2018.

 

Benedict F. Valliere, Esq. is an associate with Gebhardt & Kiefer, PC and concentrates his practice on civil litigation, primarily personal injury, municipal law, and insurance defense.  Contact Mr. Valliere at 908-735-5161 or via email.