The State of New Jersey is poised to enact a law that will provide the strongest equal pay protections in the U.S., on either the state or federal level.
The legislation, S-104, goes further than the 2009 Lilly Ledbetter Act, a federal law, which overturned federal court precedent limiting the time in which women could sue over discriminatory pay practices and how much they could recover if they won.
Among other protections that exceed those in the federal, law, the NJ legislation allows recovery of up to six years of back pay, provides for treble damages and prohibits employers from requiring existing workers or new hires to waive their legal rights as a condition of employment. It specifically bars any waiver of the two-year time limit for filing suit. (A 2014 state appellate court decision, Rodriguez v. Raymours Furniture, had found such a waiver, one that shortened the time to sue to only six months, was enforceable but the state Supreme Court reversed in 2016.)
The proposed law applies not just to female employees but to any class of employees shielded by the broad scope of NJ’s Law Against Discrimination, or LAD. The LAD’s 17 protected categories include race, color, national origin, disability, age, affectional/sexual orientation, military status and genetic information.
In addition, employers would not be allowed to punish employees who share with coworkers, lawyers or government agencies the kind of information necessary to know whether pay discrimination is taking place, such as their job titles, how much they are paid and whether they fit within any of the categories covered by the LAD.
Companies doing work for the state government would have to let it know the names and protected characteristics–gender, race, religion, age, etc.–of every employee working on the contract, and how much each is being paid, information that would be made available to the Division of Civil Rights, and, upon request, to employees and their authorized representatives
S-104 won approval from both the Senate (35-0) and Assembly (74-2) on March 26. Not a single Senator voted against it and only two Assembly members did so, Michael Patrick Carroll and Jay Webber, both Republicans. (Another eight legislators did not vote on the bill.)
The measure now awaits action by Governor Phil Murphy and there is little doubt that he will sign it into law. Promoting Pay Equity and Gender Equity is one of his signature priorities and the subject of his first executive order, issued Jan. 16, the same day he was sworn in to office.
The legislation is long overdue.
It first passed both houses (as S-992) in early 2016 by strong, albeit less overwhelming, margins: 28-4 in the Senate and 54-14 in the Assembly.
But Governor Chris Christie conditionally vetoed it on May 2, 2016. He wanted state law to mirror federal law in limiting back pay to two years and he wanted to allow waivers of employees’ time to sue, an issue then pending before the NJ Supreme Court.
Christie also objected to the treble damages and to the reporting requirement, calling it “outrageous bureaucratic red tape determination.”
Legislators could have watered down the bill but they pushed ahead,
A scheduled override vote in the Senate on Jan. 23, 2017 was canceled when it appeared that support would fall short of the 27 votes needed, though the bill had garnered 28 votes when it was originally passed.
The bill was reintroduced on January 9, at the start of the current 2018-1019 session, and moved quickly. It cleared the Senate Labor Committee on March 5, the Senate Budget Committee on March 13 and the Assembly Appropriations Committee on March 22. Along the way it was renamed the Diane B. Allen Equal Pay Act, in honor of the former Republican State senator who cosponsored the prior bill vetoed by Christie.
It also underwent some substantive changes. The most significant was probably a reduction in how much back pay can be recovered. The original bill made employers liable for the entire period of discriminatory compensation while the amendment sets a maximum of six years.
The heart of the law is that it will be illegal for employers to pay to women or other protected categories of employees lower compensation than to those outside the protected categories for “substantially similar work, when viewed as a composite of skill, effort and responsibility.” And employers who are violating the law by doing so cannot bring themselves into compliance by reducing the pay of nonprotected employees.
Pay rates at all of the employer’s locations or facilities would have to be compared in determining whether a pay disparity exists.
The bill recognizes limited circumstances in which pay can vary for similar work. The differences can be pursuant to a seniority or merit system. Alternatively, the employer must show that they are based on “legitimate bona fide factors,” such as “training, education or experience, or the quantity or quality of production.” They must also show that those factors account for all of the differential, are applied reasonably, do not perpetuate pay differences based on protected characteristics and are job-related to the position in question and based on a legitimate business necessity.
At the March 5 Senate Labor Commerce hearing, representatives of NJ Citizen Action, NOW-NJ and the National Employment Lawyers Association-NJ, spoke in favor of the bill. They praised the the fact that its protections extend beyond gender discrimination and its recognition of the continuing violation doctrine and discovery rules, which are meant to make sure that victims of pay discrimination do not go without a remedy because their employers have succeeded in hiding it from them for longer than the two-year statute of limitations.
Other supporters included New Jersey Policy Perspective, Planned Parenthood of New Jersey, AARP-NJ and the League of Women Voters. The bill also had backing from unions such as Health Professionals and Allied Employees, the New Jersey Education Association, the Communications Workers of America, the American Federation of Teachers and American Federation of State, County and Municipal Employees.
Speaking against the bill were the New Jersey Chamber of Commerce, the New Jersey Business and Industry Association and the New Jersey Civil Justice Institute, who complained among other things, that the bill would harm employers who acted in good faith reliance on current law and would burden businesses with having to justify every disparity. Several witnesses feared the reporting requirements would drive up the cost of public contracts.
One supporter, Andrea Johnson of the National Women’s Law Center, however, urged legislators to go further with transparency by extending the reporting requirement to all employers with more than 100 workers and making aggregate pay data available to the public.
Pay disparity statistics compiled by the Center reinforce the need for the law. They indicate that women in New Jersey on average are paid 81 cents for every dollar earned by men, just above the national average of 80 cents. Minority women fare much worse, with black woman making 58 cents on the dollar, versus a national average of 63 cents, and Latinas making 43 cents, against a national average of 54 cents.