The State of New Jersey’s Division on Civil Rights (“DCR”) recently issued new Guidance on the Diane B. Allen Equal Pay Act (“EPA”). The EPA, which took effect July 1, 2018, was already the most sweeping equal pay legislation in the nation by strengthening already existing equal pay protections found in the New Jersey Law Against Discrimination (“LAD”). As Governor Murphy announced on March 2, 2020, the Guidance goes even further and “make[s] clear our intentions to eliminate discriminatory pay practices in the Garden State that have historically prevented women and other marginalized groups from earning their fair share.”
The Guidance provides an overview of the EPA, a robust set of FAQs, a guide to self-evaluations for public sector employers, a sample compensation worksheet form for no-range titles, and the full text of the EPA. Here are some key takeaways:
- Covered employers. Nearly all employers are covered. There is no employee minimum—one employee in New Jersey triggers the law and out-of-state employers are covered if they have employees with a primary place of work in New Jersey.
- Covered employees. Unlike the federal Equal Pay Act and many other state equal pay laws, the New Jersey law is not limited to pay differences between employees of different genders; protections extend to pay differences between employees who differ by race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait, liability for service in the Armed Forces of the United States, nationality, or refusing to submit to a genetic test or make available the results of a genetic test.
- Out-of-state comparators. Under the EPA, employees can compare their wages against the wages of other employees located outside the State of New Jersey. Subsection (t) provides that “[c]omparisons of wage rates shall be based on wage rates in all of an employer’s operations or facilities.” However, the Guidance provides that employers may defend differences in compensation for employees in different geographic locations by showing that those differences are based on differences in cost-of-living or in relevant labor markets in those areas. Additionally, this subsection raises extraterritorial concerns about whether New Jersey is able to impose liability on a company for decisions outside its borders.
- Substantially similar work. The EPA prohibits employers from paying employees in a protected class less than those outside of the protected class for substantially similar work. Similar to the California EPA, the employee protections are stronger than the federal Equal Pay Act, which only requires equal pay for equal work. What constitutes substantially similar work is viewed as a composite of:
(1) Skill (the experience, ability, education, and training required to perform the job duties);
(2) Effort (the requirements of the job as a whole taking into account the physical or mental exertion required to complete the job); and
(3) Responsibility (required job duties and the degree of discretion and accountability required to perform the job.)
The FAQs explain that even positions with different titles and actual work done can be substantially similar. For example, “In a school setting, janitorial and food service jobs may be substantially similar in terms of skill, effort and responsibility because both may involve substantial amounts of lifting and cleaning, even though the job duties are not exactly the same.”
- Reliance of salary history. Last year New Jersey enacted a salary history ban, which went into effect January 1, 2020. The FAQs state employer reliance on salary history in determining compensation would not necessarily be assumed to perpetuate a differential in compensation based on membership in a protected class. The inquiry will “depend on the specific factual circumstances.” However, the FAQs clarify that if there is a preexisting unlawful wage gap for members of that protected class, then reliance on salary history may perpetuate an impermissible differential in compensation.
New Jersey employers should ensure that their pay practices and procedures, including those that apply to internal candidates, comport with the prohibitions and requirements outlined in the Equal Pay Act and the state’s guidance.