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TO: Chairman Fred Madden and Members of the Senate Labor Committee

FR: Chamber of Commerce Southern New Jersey; Commerce and Industry Association of New Jersey; National Federation of Independent Business; New Jersey Business & Industry Association; New Jersey Chamber of Commerce; New Jersey Civil Justice Institute; New Jersey Retail Merchants; New Jersey Society of Certified Public Accountants

DATE: March 5, 2018

RE: Senate Bill 104 – Concerns equal pay for women and employment discrimination

On behalf of the Pay Equity Business Coalition, we are writing to express our concerns with S-104.  While we appreciate and support the intent of the legislation in addressing pay discrimination and seeking to ensure that the employees of public contractors are equitably paid, we respectfully propose amendments to make the legislation consistent with federal law and the 2010 New Jersey Supreme Court Decision in Alexander v. Seton Hall University, 204 N.J. 219.

S-104 departs from New Jersey caselaw which addresses the statute of limitations under pay equity actions.  In Alexander v. Seton Hall University, 204 N.J. 219, the New Jersey Supreme court ruled that each paycheck resulting from a discriminatory pay decision constitutes an actionable act of discrimination under the New Jersey Law Against Discrimination (LAD).  However, the court limited the recovery of back wages to a two year period, consistent with the federal Lilly Ledbetter Fair Pay Act (LLFPA) of 2009 and prior case law.  Likewise, the court ruled that the “continuing violation doctrine” – which extends the life of a claim back to the initial date of an alleged discriminatory practice- is not applicable to pay discrimination claims under the LAD.

S-104 departs from that decision, essentially stopping the statute of limitations clock, and applying the continuing violation theory for actions that may have occurred 20 or 30 years ago.  Even if a claim against an employer is without merit, the employer still must spend time and money defending against it. This becomes all the more difficult if relevant records no longer exist or witnesses are no longer available. 

The bill would also provide the award of treble damages for those who prove pay discrimination, again extending beyond current legal precedent.  We propose that the bill be amended to establish a two-year limitation on damages applicable under federal law and court precedent and limit an additional award to double damages.

Another area where the bill is contrary to well-established precedent set by the US Supreme Court McDonnell-Douglas decision is regarding burden of proof.  The bill does not require the ultimate burden of proof go back to the plaintiff.  We propose an amendment to clarify that the ultimate burden of proof should remain on the employee. 

We also propose an amendment to permit the comparison of wage rates to be based on wage rates in all of an employer’s operations or facilities that are located in the same geographical region only.  Typically, salary ranges can vary depending on the geographical location of the job.

The current exceptions under the bill from paying a different rate of compensation for substantially similar work extend only where an employer could demonstrate that the differential is made pursuant to a seniority system, a merit system, or a system which measures earnings by quantity or quality of production, or the employer demonstrates that the differential is based on one or more legitimate, bona fide factors other than the characteristics of members of a protected class, such as training, education or experience; 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.

S-104 also seeks to impose a series of reporting requirements on all public contractors including providing information on the gender, race, job title, occupational category, and rate of compensation of each of their employees in connection with the contract.   The bill would require public contractors to report information to the Commissioner of Labor and Workforce Development throughout the duration of the contract or contracts with updates to the report each time there is a significant change in any of the information that is required to be reported or other significant change in employment status, including, but not limited to, medical leave of 12 weeks or more, hiring, termination, change in part-time or full-time status, or a change in “employee” or “contractor” status.

While the goal of this provision is to increase transparency and ensure public contractors are complying with the State’s workplace gender parity laws, this provision will do little to improve pay disparity.  Instead this provision would burden countless employers with onerous reporting requirements and drive up costs of public contracts, which are ultimately paid by taxpayers. 

We propose removing the reporting requirement language and instead requiring public contractors to record the same information and preserve those records for five years from the end of the contract.  Those records could be made available to the Department of Labor and Workforce Development by request.

In conclusion, we respectfully ask the sponsors to amend the bill to be consistent with federal law and the New Jersey Supreme Court Alexander v. Seton Hall University, 204 N.J. 219, decision.  This includes limiting the award of damages to double damages and clarifying the ultimate burden of proof. Finally, we respectfully ask that the expanded reporting requirements for public contractors be removed from the legislation or amended to be a recording requirement rather than a reporting requirement.

Until the requested amendments are made we respectfully ask you to vote “No” on S-104.

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