Drawing of man and woman on a balance scaleGov. Phil Murphy today signed into law a sweeping equal pay bill, making it a violation of New Jersey’s Law Against Discrimination (LAD) to pay women less than men for substantially the same work and prohibits employers from punishing employees for discussing their pay with others.

The new law imposes steep penalties; the aggrieved employee may obtain relief for up to six years of back pay and it allows courts to award treble damages for violations of the law.

While NJBIA has always supported the core intent of the legislation, the association was concerned about an earlier version of the bill that proposed an unlimited lookback period for the recovery of wages.

The original proposal provided an “unlimited lookback period for the recovery of wages because it extended beyond legal precedent found in the LAD and the federal Ledbetter Fair Pay Act of 2009,” said NJBIA President and CEO Michele Siekerka in a statement released today.

“We appreciate the changes made by the bill’s sponsor incorporating less onerous reporting requirements for public contractors and capping the lookback period to six years, rather than the decades originally sought,” she said. “However, the reasons why pay equity exists in some instances are very complex and are void of discriminatory reasons. As such, we must be mindful of aggressive legal efforts to capitalize on the six-year lookback period, without merit, which will come at great expense to unsuspecting businesses.

“NJBIA offers businesses possibly impacted by such legal action several resources to help them, including future programs addressing this new legislation.”

 

5 responses to “Murphy Signs Sweeping NJ Equal Pay Bill”

  1. NJ BizOwner says:

    What if there are two employees have the same job duties, and the company’s pay increases are merit-based. Over the years, let’s say one employee outperforms the other and happens to be a man. Under this new law, the employer must pay the woman the same amount, even if her job performance doesn’t compare. And this is fair?

    • Dave says:

      Example: Currently running a small business in NJ. Ten Million in annual sales. Hiring. Have two candidates for a high level position within the company. On male, one female. Both identical resumes, age, experience. As a business owner in NJ, based on the new law, which one do you hire?

    • Bill says:

      You would need to document the basis of the merit pay increase of the employee as well as the reasons why the other employee was not entitled to a merit pay increase. As far as employees being permitted to freely discuss their pay between other employees – a bad idea and bad legislation. This will only increase the cost of doing business and potentially reward employees with higher pay who do not deserve it. Whenever employees are freely permitted to discuss their pay and benefits with all other employees – resentment and disharmony are sure to follow. In the real estate industry, if a broker we to discuss their real estate commission schedule with other brokers, that would be a violation of the Sherman Anti Trust Act and the broker(s) can be held accountable for the violation. The purpose of the Act was to promote healthy competition. How about healthy competition between employees – isn’t that good for the consumer as well as the business or should be just pay everyone the same in substantially the same position just because they occupy an office chair and desk. At the first opportunity the employees. will be ganging up on the employer for more and more money – I can foresee all of the litigation too. The lawyers have to be loving this legislation. Yet another nail in the coffin of New Jersey business…

  2. Bill says:

    Who decides what is substantially the same work?

  3. Stefanie Riehl says:

    NJBIA has gotten this question before, so we’d like to chime in through our Member Action Center.

    The law does not specifically define the term “substantially similar” and only states that it is a composite of skill, effort, and responsibility required for that work. It does, however, explicitly allow differences in pay when they are based on a seniority system or a merit system, or, the employer can demonstrate that:

    • the difference can be accounted for based on some legitimate factor (like training, education, experience, or productivity) other than the protected trait;
    • the factor is not based on, nor does it perpetuate, a compensation difference as a result of a protected trait (for instance, an employer who pays workers who have master’s degrees more would need to ensure that the policy doesn’t adversely affect minorities);
    • each factor is applied reasonably;
    • one or more of the factors accounts for the entire wage differential; and,
    • the factors are job-related with respect to the position and based upon business-necessity.

    The law specifically states that employers may not reduce the salaries of better paid workers to comply.