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Employers Scrambling to Comply With New Jersey Pay Law

June 6th, 2019

equal pay day

In the year since New Jersey passed one of the toughest -- if not the toughest -- equal pay laws in the nation, employers have scrambled to comply.

The New Jersey Law Journal calls the Diane B. Allen Equal Pay Act, "Unprecedented in breadth and scope in pay disparity claims." It makes it unlawful to pay members of a protected class (as defined by New Jersey, which is substantially broader than the federal rules) less than employees who are not members of the protected class for the same or substantially similar work.

There are exceptions for seniority and merit and for a handful of other reasons. But the law puts the burden on the employer to show:

  • "That each of the factors is applied reasonably;
  • That one or more of the factors account for the entire wage differential; and,
  • That the factors are job-related with respect to the position in question and based on a legitimate business necessity. A factor based on business necessity shall not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.”

"Employers beware," warns attorney Benjamin E. Widener, "The Act has sharp teeth." "Under the New Jersey Equal Pay Act, a prevailing employee will be awarded treble damages (3x compensatory damages)." Those are in addition to those provided under New Jersey's Law Against Discrimination, which, in addition to compensatory damages, allows punitive damages, attorneys’ fees and court costs. And the Equal Pay Act extends the statute of limitations for a discriminatory pay practice from two years to six years.

To proactively remedy inequities and avoid problems, many employers are conducting pay audits, the Law Journal notes.

In an appearance on Employment Law This Week, a video series produced by Epstein Becker and Green, Anthony Campanelli, of Deloitte Financial Advisory Services, offers five tips for doing a pay compliance audit:

  1. "You want to put together the right team. And this is a team of not just human resource professionals but also your legal labor employment attorneys, your forensic analytics specialists, and, of course, the business.
  2. You want to execute a risk assessment. You want to understand the policies and procedures that your company has in place. You also want to think about what locations, segments, and roles may be prone to potential risk.
  3. You need to obtain the data for the analysis. And this includes both the quantitative data, as well as the qualitative data. Fourth: you want to utilize forensic analytic specialists —specialists that are able to interrogate the data to identify outliers.
  4. You need to investigate those results. You need to understand those employees that could be above or below the median.”

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