The federal Equal Pay Act (EPA) requires that men and women receive equal pay for equal work in the same establishment. In addition to the federal EPA, many states, including New Jersey, have enacted their own equal pay laws prohibiting wage discrimination based on gender and other characteristics.

This Employment Law Summary provides an overview of New Jersey’s Diane B. Allen Equal Pay Act (NJEPA), which prohibits certain pay differentials between men and women, and the Law Against Discrimination (LAD), which was amended by the NJEPA to expand protections against unequal pay based on various protected traits.

COVERED EMPLOYERS

The NJEPA applies to virtually all employers in the state, other than nonprofit hospital associations or corporations, and generally protects all employees, both male and female. However, it does not protect volunteers providing service for a nonprofit organization, farm workers, or domestic servants in a private home or hotel.

The LAD is a broader anti-discrimination law that prohibits a variety of entities, including all employers with one or more employees in the state (other than employers of domestic servants), from discriminating in compensation or against employees or job applicants based on any of several characteristics.

PROHIBITED PAY PRACTICES

The NJEPA prohibits employers from discriminating in any way in the rate or method of payment of wages to any employee based on sex. In addition, the LAD prohibits employers from discriminating against employees or applicants in compensation or the terms, conditions or privileges of employment based on any of the following, which are known as protected traits:

  • Race (including “traits historically associated with race,” such as hair texture, hair type and protective hairstyles);
  • Color;
  • Age (18+);
  • Sex (including pregnancy or breastfeeding);
  • Affectional or sexual orientation;
  • Gender identity or expression;
  • Creed/religion;
  • Marital status;
  • Civil union status;
  • Domestic partnership status;
  • Disability, atypical heredity cellular or blood trait;
  • Genetic information;
  • Nationality;
  • National origin;
  • Ancestry; or
  • Liability for military service.

Under the LAD, an employer may not pay an individual who is a member of a protected class a rate of compensation, including benefits, that is less than the rate it pays to employees who are not members of the protected class for substantially similar work when viewed as a composite of skill, effort and responsibility.

Substantially similar work is evaluated as a combination of the skill, effort and responsibility required to perform an employee’s job duties. Therefore, two employees perform “substantially similar work” when their job duties require a similar degree of skill, effort and responsibility. All three factors should be examined together when determining whether work is substantially similar. Work is substantially similar where, on balance, the jobs are substantially similar, but they need not be identical. Minor differences in skill, effort and responsibility do not preclude work from being substantially similar.

An employer that is paying a rate of compensation in violation of these laws may not reduce the compensation of any employee to comply.

EXCEPTIONS

Under the NJEPA, a differential in pay between employees that is based on a reasonable factor or factors other than sex is not considered discrimination.

Under the LAD, an employer may pay a different rate of compensation based on a protected trait only if the employer demonstrates that the differential is made pursuant to a seniority system or a merit system or if the employer demonstrates:

  • That the differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class, such as training, education, experience, or the quantity or quality of production;
  • That the factor or factors are not based on and do not perpetuate a differential in compensation based on sex or any other characteristic of members of a protected class;
  • 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 may not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.

For these purposes, all forms of compensation are considered, including salary, bonuses, health plans and pension plan contributions, and comparisons of wage rates must be based on rates paid within all of an employer’s operations or facilities.

SALARY HISTORY RULES

The LAD prohibits employers in the state from asking job applicants about their past salaries or using past pay information to screen applicants for employment. It also prohibits employers from using an applicant’s past pay information to determine the applicant’s compensation for a position unless the applicant voluntarily, and without prompting or coercion, discloses pay history information.

The law also prohibits employers from the following for any employment position that is physically located (in whole or in substantial part) within New Jersey:

  • Screening job applicants based on their salary histories (which include but are not limited to applicants’ prior wages, salaries or benefits);
  • Requiring that an applicant’s salary history satisfy any minimum or maximum criteria;
  • Using an applicant’s salary history—other than that which the applicant voluntarily, and without prompting or coercion, provides—to determine his or her salary, benefits or other compensation;
  • Considering an applicant’s refusal to volunteer salary history information in any employment decisions;
  • Including questions about an applicant’s salary history on a job application, unless an employer operates in more than one state and the application instructs applicants for jobs in New Jersey not to answer the questions;
  • Conducting background checks without specifying that an applicant’s salary history is not to be disclosed;
  • Asking an applicant about previous experience with incentive or commission plans, unless the position applied for involves these types of plans as part of its total compensation package; and
  • Asking an applicant how much the applicant earned in connection with prior incentive or commission plans.

EXCEPTIONS

The salary history prohibitions do not apply when an applicant is a current employee seeking a promotion or other internal transfer.

In addition, employers may:

  • Use any salary history information about an applicant that they have already obtained through their prior employment of the applicant;

RETALIATION AND COERCION PROHIBITIONS

The NJEPA and LAD prohibit employers from:

  • Retaliating against an individual for:
    • Opposing or reporting unlawful practices;
    • Seeking legal advice regarding rights under the laws;
    • Sharing relevant information with legal counsel or a governmental entity; or
    • Filing a complaint, testifying or assisting in any proceeding under the laws; and
  • Coercing, intimidating, threatening or interfering with any individual in the exercise or enjoyment of, or on account of the individual having aided or encouraged any others in the exercise or enjoyment of, any right granted or protected by the NJEPA or LAD.

NJEPA ENFORCEMENT

The New Jersey Department of Labor and Workforce Development (DLWD) administers and enforces the NJEPA. The DLWD has the power to enter any employer’s place of employment to inspect and copy payrolls and other employment records and obtain other information necessary to the administration and enforcement of the NJEPA. Individuals may also make complaints to the DLWD about potentially unlawful practices.

If the DLWD receives a complaint or has other reason to believe an employer violated the law, it will send notice to the employer, provide an opportunity to respond and hold a hearing. If the DLWD finds that the employer has violated the NJEPA, it may order the employer to pay:

  • The full amount of the salary or wages owed (including up to six years of back pay);
  • An additional amount that is equal to the above, as liquidated damages; and
  • Fines of up to $1,000 for a first offense, $5,000 for a second offense, and $10,000 for third or subsequent violations.

If an employer willfully fails to furnish required records and information to the DLWD upon request, refuses DLWD entry into a place of employment that it is authorized to inspect, falsifies records, or hinders, delays or otherwise interferes with DLWD in the performance of duties to enforce the law, the employer may be charged with a criminal misdemeanor punishable by fines of between $50 and $200.

If an employer’s violation of the NJEPA is willful, or if an employer discharges or in any other manner discriminates against an employee because the employee has made a complaint about unlawful practices to an employer, the DLWD or any other person or participated in any proceeding under or related to the NJEPA, the employer may be charged with a misdemeanor punishable by fines of between $50 and $200, imprisonment for between 10 and 90 days, or both.

Finally, individuals who believe an employer has violated the NJEPA may file a civil lawsuit against the employer within two years of the most recent discriminatory paycheck, compensation or other benefit. In these cases, courts may order an employer to pay a plaintiff’s actual damages and reasonable attorney’s fees.

LAD ENFORCEMENT

New Jersey’s LAD is enforced by the New Jersey Division on Civil Rights (DCR). Under the LAD, an individual must file a complaint within 180 days of the date of an alleged violation. However, an individual may instead choose to file a lawsuit in the Law Division of the Superior Court of New Jersey within two years of an alleged violation.

The DCR itself, the state’s attorney general or the DLWD may also file a lawsuit against an employer in the Superior Court of New Jersey. In this type of case, the court may order a noncompliant employer to pay penalties (in addition to imposing other remedies, such as damages payable to victims of unlawful practices and injunctions against future unlawful practices). As an alternative to seeking penalties, the attorney general or the DLWD may seek and obtain punitive damages payable to the state.

In any claim or lawsuit under the LAD, penalties that may be imposed against an employer include fines of up to:

  • $10,000 for a first violation;
  • $25,000 for a second violation; and
  • $50,000 for a third or subsequent violation.

NOTICE REQUIREMENTS

Employers with 50 or more employees in the state must conspicuously post a notice about the NJEPA in a place that is accessible to all workers. This notice must explain that employees have the right to be free of gender inequity or bias in pay, compensation, benefits or other terms or conditions of employment.

Employers must also provide each employee with a written copy of the notification upon hire and again annually, on or before Dec. 31 of each year. The notification must contain an acknowledgment that the employee has received, read and understood the terms of the notification.

REPORTING REQUIREMENTS FOR STATE CONTRACTORS

The NJEPA requires any employer entering into a contract with the state or an instrumentality of the state for “qualifying services” or “public works” to provide to the DLWD demographic data for all employees who are employed in connection with the contract (for public works) and for all employees (for qualifying services). This requirement does not apply to employers who contract with counties, municipalities or other local government entities. The report must contain the gender, race, ethnicity, job category, compensation and number of hours worked by each employee. More information about this is available here.

MORE INFORMATION

Contact Alera Group for more information on equal pay laws in New Jersey.