NJBIA At Issue

What’s in the New Pay Equity Law?

At Issue

Michael WallaceOnce the ball got rolling on the issue of pay equity, we knew it was going to roll through New Jersey. And it has. Next month, all New Jersey businesses will be operating under a new law making it illegal to pay certain employees less for substantially similar work.

Pay discrimination laws are not new (it has been illegal since the 1960s), but the law Gov. Phil Murphy signed in April is far more demanding. While NJBIA supports the intent of the law, the original bill proposal could have been devastating to businesses. That’s why over the course of several years we worked hard to mitigate the impact. Business owners, however, should still take steps to protect themselves from the potentially costly new requirements that made it into the law. 

To that end, here are some things you should know.

While the pay gap between men and women has received the most attention, the law prohibits discrimination in pay under every protected classification in New Jersey’s Law Against Discrimination (LAD). The LAD is one of the most expansive anti-discrimination laws in the nation, protecting employees from discrimination on the basis of multiple factors including race, age, marital status, civil union status, domestic partnership status, sex and pregnancy. 

Also, if you have a provision in your handbook or a policy of prohibiting employees from discussing their salaries with others, you need to change it. Previously, New Jersey’s law only addressed an employee requesting information from another employee to investigate or take legal action regarding discriminatory compensation.

The law Governor Murphy signed in April expanded this. The new law explicitly prohibits employers from retaliating against employees who disclose their salaries and other information about their jobs, and employers can’t require employees or prospective employees to waive their rights to make, discuss or request those disclosures. Employees who seek legal advice, share relevant information with an attorney, or provide information to a government entity are likewise protected.

You should begin documenting how compensation decisions are made right away, and review your employee handbook to ensure anti-discrimination text is current and makes clear that employees who discuss compensation and benefits will not be retaliated against.

You should also review any merit-based compensation systems and performance review forms, ratings and procedures. Look for situations where two employees have the same title and compare their compensation to their actual job descriptions to see if those discrepancies can be justified. The law does allow for pay differences based on seniority, merit or other factors, but there are a number of conditions.

Companies that are public contractors (excluding those that sell goods or products) must report compensation and hours worked, categorized by gender, race, ethnicity and job category, for each of their establishments. The New Jersey Department of Labor and Workforce Development will provide a form for non-public works (not construction-related) employers to submit this information. Public works contractors would be required to provide the same information, but through certified payroll records as opposed to a form.

For more details, NJBIA members can download our Fast Facts at www.njbia.org/new-pay-equity-law. 

The governor has billed New Jersey’s pay equity law as the “toughest in the nation,” and it’s hard to argue otherwise. The issue, however, has been gaining momentum nationwide. It is unlikely that this will be the last policy initiative to address pay equity.


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