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NJ Equal Pay Act – Effective July 1, 2018

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Are you compliant?

On April 24, 2018, the governor of New Jersey (“NJ”), Phil Murphy, signed into law the strongest equal pay law in the country, which impacts all business in the State of New Jersey, regardless of size and number of employees. The Diane B. Allen Equal Pay Act (the “Act”), named after the longtime state senator who left her job in broadcasting in 1994 after filing gender and age discrimination complaints with the Equal Opportunity Employment Commission (“EOEC”), protects women and minorities in the state from workplace discrimination by making it illegal to offer them lower rates of compensation, including benefits.

The NJ Equal Pay Act is designed to close the pay gap of nearly 20 percent between women and men. Not only is the Act written to protect women and minorities, it protects all workers based on each of the characteristics protected by New Jersey Law Against Discrimination (“NJLAD”), which includes creed, color, national origin, nationality, marital status, sexual orientation, gender identity, disability, etc.

Employers are not required to pay everyone the same, provided they are able to justify the pay differential based upon justifiable factors such as seniority, experience, education, quantity or quality of production to establish a merit-based system. Employers who pay one person more than another will now have to justify the differential in compensation. This will be done based on factors such as how their experience and education sets them apart. NJ now requires equal pay for “substantially similar work”. For example, if a woman or minority working in NJ has a different title than an employee who is not protected under the NJLAD in NJ within the same company, but performs similar tasks and has the same responsibility, they must be paid the same as the employee who is not protected under the NJLAD.

How do employers protect themselves? At a minimum, employers should review their current payroll. If they find disparities, they should fix them by increasing the pay of the lower-paid worker. Employers are prohibited from cutting the wages of higher-paid staff in order to make salaries comparable. In accordance with the Act, employers are prohibited from retaliating against workers for discussing their compensation with co-workers.

It is the responsibility of the company to prove that they are in compliance with the Act. In the event the employer cannot prove their compliance regarding difference of pay based on factors that are justifiable, this will be considered a violation.

Workers may file complaints with the Department of Labor and Workforce Development. The statute of limitations for workers who seek damages in court has been extended to allow these individuals to recoup lost wages for up to six years — three times longer than the federal law’s two-year cap. In addition, an employee may receive punitive damages if the employer’s conduct is deemed to be willful.

So, are you confident that your business is in compliance with the NJ Equal Pay Act?

Feel free to contact WithumSmith+Brown with any questions or assistance with familiarizing yourself with the NJ Equal Pay Act and any potential changes that are required to ensure compliance.

Lisa M. Morgan, CPA Partner
(732) 842 3113
lmorgan@withum.com

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Lauren Naples, CPA, MBA, PSA, Senior Manager
(732) 842 3113
lnaples@withum.com

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