Jill Scheetz, PHR, SHRM-CP
On July 1, 2018 the Diane B. Allen Equal Pay Act (new EPA) becomes effective. At first blush, you might think your company has nothing to worry about. However, when the prize for plaintiffs who win a jury’s (or the NJ Division of Civil Rights’) opinion is treble damages, employers should be doing their due diligence to ensure their pay practices comply before the law goes into effect.
The Diane B. Allen Equal Pay Act amends the New Jersey Law Against Discrimination (NJ LAD), making discrimination in wages on the basis of any protected class (not just gender) an unlawful employment practice. Under the NJ LAD, employers are prohibited from discriminating in the rate or method of wages against an individual based on race, creed, color national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity or gender expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces. The new EPA looks not only at wages but includes benefits as well when considering “compensation.”
If you haven’t already, business owners should be working with your HR and/or payroll staff to analyze current pay rates and benefits for all employees. Ensure job descriptions and the company’s tracking system for education, training, certifications, and experience are up to date. In addition, the company should be using a tracking system for production quantity and/or quality levels if these could be used in determining pay rates. Once you determine which employees are performing “substantially similar work,” you need to look at pay rates and benefits and ensure that these employees are compensated at the same rate, unless there is a legitimate business necessity that warrants the differential. Further, the company should review their employee handbook and company policies to ensure future compensation rates are calculated equitably for employees performing substantially similar work and that any differences are well documented. The employee handbook and company policies also need to make clear that retaliation against employees who request, discuss, or disclose compensation or compensation differentials to coworkers, an attorney, or government officials is subject to corrective action, up to and including termination. This is because treble damages may be awarded to an employee who wins a claim of employer retaliation for such disclosures.
A final note on the new EPA is that the law allows for a statute of limitations of six years (versus two years for the NJ LAD), and that an unlawful employment practice occurs each time the employee experiences compensation discrimination; i.e., each paycheck paid to an employee is a separate act. Therefore, employers should take reasonable action to comply with the new EPA now to help limit your liability.