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Is Your Company Prepared to Implement the Equal Pay Act?
Beginning July 1, New Jersey’s Law Against Discrimination (“LAD”) will not only prohibit what is historically viewed as employment discrimination (e.g., hiring, firing, promotions, etc.), but will also prohibit “pay gaps” among all protected classes covered under the law.

by Carmen Saginario Jr., Esq., co-chair, labor & employment group, Capehart Scatchard

While this law is generally intended to “fix” gaps in gender pay, the new law makes it illegal for employers to treat those in protected classes differently in terms of compensation including, among others, those classes based on race, creed, color, national origin, nationality, age, pregnancy and gender identity or expression.

What else is new in the law? In addition to attorneys’ fees, a prevailing employee may be entitled to “treble” (i.e., triple) damages. This means that an employee “underpaid” by $10,000 per year for six years (the new statute of limitations) may be entitled to $180,000 in damages if successful in proving disparate pay based upon a protected status.

There are some exceptions, however. For example, pay differences are defensible if there are, among other initiatives, established seniority/merit-based systems; pay differences are based on “legitimate, bona fide factors” other than a protected trait—such as training, education or experience; the “legitimate factor” is not based upon and does not perpetuate a compensation differential based on a protected trait; there is reasonable application of these factors; one or more of the factors account for the entire wage differential; and the factors are job-related with respect to the particular job and are based on legitimate business necessity.

It is significant that if a company is going to use the “business necessity” defense to support a pay differential among protected classes, the employer must consider alternatives before making a decision that results in pay disparities based on a protected trait. It is also note-worthy that the law not only requires an employer to show a legitimate business reason for the disparity (as described above), but must also show that the “legitimate reason” does not actually result in a disparate impact on a protected class.

The new law also contains anti-retaliation provisions which allow employees to discuss or disclose compensation/pay issues and also prohibits employers from requiring employees to sign a waiver or agreement not to make any requests or disclosures regarding compensation issues. Employers can also expect that the state will issue regulations that require businesses involved with public work to submit data regarding compensation and hours worked by employees, as well as information regarding gender, race and ethnicity.

The takeaway—employers should carefully review their pay structures to ensure that there are not unjustifiable discrepancies in salaries/rates among those in protected classes who perform the same work. If questionable “pay gaps” are discovered, employers should address those issues immediately by seeking professional advice to ensure that they are on the right track or if they should take swift action to “right” a potential wrong. Remember—each case is fact sensitive and requires individualized attention.

Carmen Saginario Jr., Esq., is co-chair, labor & employment group for Capehart Scatchard.

Published (and copyrighted) in South Jersey Biz, Volume 8, Issue 6 (June 2018).

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