On March 27, 2018, the State of New Jersey passed comprehensive legislation, known as the Diane B. Allen Equal Pay Act, that protects all classes of employees recognized under the New Jersey Law Against Discrimination.  The law goes into effect on July 1, 2018.  Specifically, the law makes it an unemployment practice “[f]or an employer to pay any of its employees who is a member of a protected class at a rate of compensation, including benefits, which is less than the rate paid by the employer to employees who are not members of the protected class for substantially similar work, when viewed as a composite of skill, effort and responsibility.”

The Diane B. Allen Equal Pay Act expressly provides for narrow, itemized permissible reasons for offering employees a different rate of compensation.  Specifically, the law states that “[a]n employer may pay a different rate of compensation only if the employer demonstrates that the differential is made pursuant to a seniority system, a merit system, or the employer demonstrates: (1) that the differential is based on one or more bona fide factors other than the characteristics of members of the protected class, such as training, education or experience, or the quantity or quality of production; (2) that the factor or factors are not based on, and do not perpetrate a differential in compensation based on sex or any other characteristic of members of a protected class; (3) that each of the factors is applied reasonably; (4) that one or more of the factors account for the entire wage differential; and (5) 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 shall not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.”  The law also expressly provides that “comparisons of wage rates shall be based on wage rates in all of an employer’s operations or facilities.”

Significantly, the law enhances the damages available to prevailing employees under the New Jersey Law Against Discrimination.  In addition to available compensatory damages, punitive damages, and attorneys’ fees and costs under the New Jersey Law Against Discrimination, a prevailing party may be awarded three times the amount of monetary damages (known as treble damages) for unlawful discrimination or retaliation under the Dianne B. Allen Equal Pay Act.

This legislation is a significant victory for employees in the State of New Jersey as they will be afforded additional protection for unlawful differential in compensation.  If you have any questions about this law or the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.