With the July 1, 2018 enactment of the Diane B. Allen Equal Pay Act (“NJ Equal Pay Act”), New Jersey employers must be vigilant in ensuring that employees performing “substantially similar work” be paid the same wages, benefits, or other compensation, unless certain limited exceptions apply.
The NJ Equal Pay Act covers all of the classes protected under the New Jersey Law Against Discrimination (“NJ LAD”). If employers fail to comply, the cost can be significant. In addition to the broad array of damages already afforded under the NJ LAD, under the NJ Equal Pay Act, an aggrieved employee can claim back pay for up to six (6) years (if the violations continue into the statutory period) and treble damages (3 times the amount of the actual damages).
Employers are prone to complications in this area. Compensation decisions can often be handled on a decentralized basis, which increases risk. Employers should consider the benefit of conducting an audit to ascertain compliance and take action if needed to eliminate disparities.
KSB Law performs Equal Pay Audits. The process is typically broken down in the three-phase approach described below.
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Phase 1: Data is obtained and organized as to employee compensation roles, duties and EEO data.
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Phase 2: Data is assessed to identify compensation disparities and the reasons underlying any disparities.
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Phase 3: Data on disparities is analyzed and conclusions drawn as the whether any disparities will qualify as “legitimate bona fide factors” such as training, education or experience, or the quantity or quality of production.
KSB Law also conducts training on the requirements of the NJ Equal Pay Act for professionals and leaders involved in the hiring process and salary decisions.
