New Bill Could Mean New Jersey Wage News
UPDATED (May 3, 2016): On Monday, May 2, 2016 Governor Chris Christie vetoed the bill, barring gender-based pay discrimination. Governor Christie stated that it would go beyond federal standards and make New Jersey "very business unfriendly."
Date: April 1, 2016
New Jersey employers need to be alert as to whether Governor Christie signs or vetoes a significant wage bill passed by the New Jersey Assembly about two weeks ago, which was approved by the Senate in February. The Bill would amend the New Jersey Law Against Discrimination (NJLAD) by requiring pay equity between genders. Although pay disparity based on sex is already unlawful under state and federal laws, I predict that if this Bill is signed into law, New Jersey employers will witness a firestorm of discrimination law suits.
The Bill is significant in at least 3 respects:
- First, whereas it is now unlawful to discriminate in pay for the same job, the Bill outlaws pay disparity for “substantially similar work” as defined by the skill, effort and responsibility of the positions being compared. Plaintiffs lawyers will have a field day with this nebulous standard which will likely result in dueling experts as to what is and what is not substantially similar work. Presumably, the employee-plaintiff would bear the burden of demonstrating that the position or position to which the plaintiff compares his or her work is comparable, but it is not clear as to what evidentiary burden must be met; and it is clear that where positions are found to be comparable, the employer bears the burden of proving that any pay disparity results from something other than sex. (see below)
- Second, employers who have multiple locations must be alert that comparisons are not limited to the location of the complaining employee. Thus, a waitress in a south Jersey restaurant might be able to compare her wage to a waiter in the Employer’s restaurant just outside New York City. The Bill creates a safe harbor where the employer can prove that the pay difference is the result of a bona fide factor other than sex such as training, education, experience, or quantity or quality of output, but different prevailing wage rates are not expressly set forth as a bona fide factor. Furthermore, even if the Employer can establish a bona fide factor, it must also prove that that factor does not perpetuate sex-based differentials in Pennsylvania. That is a critical factor. An employer who has a bona fide basis for a pay difference nevertheless violates the law if that factor perpetuates sex-bases differentials. The Employer is also burdened to prove that the factor or factors are reasonably applied; that, taken together, they account for the entire differential and that they are related to the job at issue based on business necessity. Furthermore, where there is an alternative practice that would serve the same business purpose without creating a wage differential, the factor will be disallowed as a defense. It is not hard to see the evidentiary nightmare this Bill could cause.
- Lastly, and most importantly, every pay period where there is an unlawful differential constitutes a separate violation and, unlike the analogous federal statute, there is no cut off to the look back period. (Federal law has a two-year look-back). So, long as suit is brought within the applicable two year statute of limitations, the plaintiff may recover for the entire time of the violation so long as it has been continuous. This provision raises interesting Constitutional (ex-post facto) issues for violations occurring prior to the Bill becoming law, if ever it does; and, because the Bill prohibits Employers from requiring employees to agree to a shorter limitations period it raises questions as to the effectiveness of the broad release language normally found in severance agreements.
This Bill prohibits retaliation against employees who disclose pay and benefit information if the disclosure relates to assisting in a pay equity investigation. This provision is not a big deal for the vast majority of employers in light of the fact that employees are free to disclose such information, at least to each other, under the National Labor Relations Act. However, it could limit the Employer’s ability to limit disclosure of such information to investigating agencies.
Although he has twice previously vetoed similar legislation, this could be a very significant deal if the Governor signs the Bill into law.
For questions, comments or additional information, please contact Robert Small, Partner in our Employment Practice Group, at firstname.lastname@example.org or via phone at 215.495.6541.