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The Diane P. Allen Equal Pay Act - What New Jersey Employers Need to Know and Do

On April 24, 2018, New Jersey passed one of the strongest equal pay laws in the country. The Diane P. Allen Equal Pay Act amends New Jersey’s Law Against Discrimination to strengthen pay equity for employees. This law went into effect on July 1, 2018, so employers must understand the significance of this law and, further, must take proactive steps to ensure compliance. Here is what you need to know: 
  • This law applies to any employee who is a “member of a protected class,” not just women. This includes, but is not limited to, gender, race, creed, age, national origin, sexual orientation, and marital status. It is possible that this this law could cover your entire workforce.  
  • With very limited exceptions, employers are prohibited from paying any of these employees lower compensation for “substantially similar work.” Compensation includes both wages and benefits, and employers must raise the pay of the lower-paid employee. 
  • The law allows exceptions when the pay difference is based upon a seniority or merit system, or a separate five-factor test which analyzes the legitimate business reasons for the difference in pay. All five factors of this test must be met and the burden of proof is on the employer
  • Every instance of discrimination, i.e. every paycheck with lower wages, is a separate violation.
  • Discriminated employees can now receive back pay going back as far as six years. In addition, employees can be awarded treble, damages i.e., triple damages. 
  • In addition to the prohibitions on wage discrimination, employers are also prohibited from retaliating against employees who discuss issues related to the law with other employees, or seek legal advice regarding the same. Moreover, employers cannot require employees to waive rights under the act, or modify their rights in anyway. 
 
The Equal Pay Act has significant implications for all employers in New Jersey. With the potential for treble damages on every instance of a wage discrimination, it is vital that employers take proactive steps to comply with this law. Therefore, all of the following steps are recommended to ensure proper compliance with the law:
 
  • Conduct a thorough review of all pay and benefit packages to ensure that employees who perform substantially similar work are compensated at the same rate of pay.  
  • Review all employee manuals, handbooks, and job descriptions to identify which employees perform “substantially similar work,” and therefore, must receive the same wages and compensation. 
  • Review and update internal policies and manuals to ensure that if a seniority or merit system is utilized, that system complies with the law, is well documented, and is uniformly applied. 
  • Review and update all anti-discrimination and retaliation policies, as well as internal reporting procedures for employees, to ensure compliance with the Act. 
  • Document all determinations and analysis regarding pay differentials, whether or not the differential is determined to be appropriate. Furthermore, employers bear the burden of justifying all wages. 
  • Contact an experienced employment attorney to discuss specific questions and circumstances. 
 
Without question, these recommendations will require significant time and expense by employers. By taking proactive steps, however, employers minimize their risk and exposure under the new law. 


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