On March 26, 2018, the New Jersey legislature passed the Diane B. Allen Equal Pay Act, which amends the New Jersey Law Against Discrimination (LAD). With Governor Phil Murphy’s signature, the act — which exceeds the protections of the federal Lilly Ledbetter Equal Pay Act, and addresses issues broader than gender pay equity — will take effect on July 1, 2018.
Key Elements of the Allen Act
- Applies to all protected categories under the LAD, not just gender: The Allen Act will prohibit employers from paying an employee who is a member of any protected class under the LAD at a rate that is less than the rate paid to employees who are not members of that protected class for substantially similar work.
- Expands existing protections by stating that a violation occurs each time an employer pays an employee discriminatory wages: Thus, the statute of limitations is effectively restarted each time the employee receives a paycheck. The Allen Act also expands the recoverable damages to provide back pay for the entire period of violation, up to six years. In addition, the new law provides for treble damages for any violation.
- Strengthens anti-retaliation protections of the LAD: Under the new law, employers are prohibited from taking adverse action against an employee as a result of that employee discussing, disclosing, or requesting certain job-related information of that employee or any other employee. This includes information on job titles, rates of compensation, benefits, and protected class. The protection also extends to discussions an employee has when seeking legal counsel, and the sharing of information with governmental entities. Furthermore, the new law prohibits employers from requiring employees to sign a waiver, or otherwise agree to not make such requests/disclosures, as a condition of employment.
- Includes reporting requirements for employers that contract with the state: The Act will require covered employers to submit reports to the State Commissioner of Labor and Workforce Development on compensation data for every employee working on, or in connection with, the contract, including information on each employee’s gender, race, job title, total compensation, and any change in status during the contract.
Advice for New Jersey Employers
Prior to the Allen Act’s expected effective date of July 1, 2018, employers in New Jersey should prepare by:
- Reviewing their compensation data and records to identify and remedy any potential pay disparities and to ensure that they are providing equal pay for employees who are performing substantially similar work
- Review current employee handbooks and policies and make any necessary revisions to ensure compliance with the new law
- Provide updated training to HR representatives and management to advise of the new requirements under this law
As with any change or amendment in law, employers should consult with their employment counsel to review the impact of the Allen Act on their current policies and practices. For more information on how the Allen Act may affect your business, please contact: