Fast forward to the passage of the Allen Act more than four years later. Although the Allen Act has been championed primarily as gender pay equity legislation, its equal pay provisions are much broader and encompass all protected classes under the LAD, making it one of the broadest pay equity laws in the nation and distinguishing it from similar laws in other jurisdictions. For example, New York’s pay equity law is directed at correcting gender inequity only. The Allen Act is a giant leap forward toward eradicating pay inequity affecting all protected classes in New Jersey and commands the immediate attention of New Jersey employers.
Under the Allen Act, it is an unlawful employment practice to pay an employee who is a member of any protected class under the LAD less compensation and benefits than employees outside the protected class for “substantially similar” work, unless the employer can demonstrate a recognized justification.
Like the California Fair Pay Act, the Allen Act provides that “substantially similar” work will be determined by a “composite of skill, effort and responsibility.” If a discrepancy in compensation exists, an employer may justify the difference based on:
These exceptions, which create a difficult burden for employers, are similar to the exceptions in place under New York state law since 2016.
Employers relying on “bona fide factors” to justify pay discrepancies must also show that:
It remains to be seen how the courts will interpret the factors cited above and whether judicial decisions will affect the ability of employers to succeed in defending pay equity claims based on the three statutory exceptions.
Crucially, New Jersey employers, like California employers, cannot justify differences in pay based on work location. The Allen Act mandates that wage rates of employees performing substantially similar work “shall be based on wage rates in all of an employer’s operations or facilities” without regard to geographic location. For example, this may mean that an employer could not justify lower rates in Salem County relative to pay rates in Bergen County based on location, even though the cost of living in those counties is not the same. This differs from New York’s pay equity law, which allows employers to consider work location within specified geographic parameters.
The Allen Act also expressly prohibits employers from reducing rates of compensation as a means of correcting pay disparities.
The Allen Act significantly expands the existing anti-retaliation provision of the LAD with respect to employees’ inquiries regarding pay equity by prohibiting employers from requiring an employee or prospective employee to sign a waiver or otherwise agree by contract to refrain from making or responding to a protected request.
Unlike traditional LAD claims that have a two-year statute of limitations, absent application of the continuing violation doctrine or the discovery rule, the statute of limitations for pay equity violations under the Allen Act is six years—the same as the New York law. The limitations period starts anew each time “an individual is affected by application of a discriminatory compensation decision or other practice.” Like violations of the Lilly Ledbetter Fair Pay Act of 2009, each paycheck with an unequal pay rate is a separate act of discrimination that restarts the statute of limitations. The Allen Act is clear that employers are forbidden from requiring employees or prospective employees to “consent to a shortened statute of limitations or to waive any of the protections” provided by the LAD. (Emphasis added.)
Consistent with the other expansive rights afforded by the Allen Act, a successful litigant has the right to significantly enhanced damages. An employer who violates the pay equity or anti-retaliation provisions of the Allen Act will have exposure for treble damages (“three times any monetary damages”). The Allen Act does not affect the remedies available under the LAD, which provides for the recovery of compensatory damages, both economic and noneconomic, punitive damages, equitable relief, attorneys’ fees, costs and penalties. It is unclear whether the treble damages provision of the Allen Act applies to all types of monetary damages recoverable under the LAD or just back wages based on the pay inequity.
The Allen Act also imposes new requirements for employers who contract with the state or any other public body to provides services (except for a public work[1]). Such employers must provide a report to the NJDOL commissioner (on a form established by regulation) that includes required information regarding the compensation and hours worked by employees categorized by gender, race, ethnicity and job category.
In addition, any employer, regardless of their location, who enters into a contract with a public body to perform any public work must provide certified payroll records to the commissioner with information regarding the gender, race, job, title, occupational category and rate of total compensation of every employee employed in New Jersey in connection with the contract.
The Allen Act allows the commissioner to make such information available to anyone who is, or was, an employee of the employer during the period of any of the contracts, or any authorized representative of the employee, upon request.
To ensure compliance with the Allen Act, New Jersey employers should, at a minimum, consider implementing the following measures:
With the effective date of July 1, 2018, employers should not delay in engaging in privileged reviews of compensation structures and implementing policies and procedures needed to reduce or avoid the risks associated with noncompliance with the Allen Act.
If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
[1] A “public work” is construction, reconstruction, demolition, alteration, custom fabrication, or repair work or maintenance work, including painting and decorating, done under contract and paid for in whole or in part out of the funds of a public body, except work performed under a rehabilitation program.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
