New Jersey Equal Pay Act Effective July 1

On July 1, 2018, the Diane B. Allen Equal Pay Act becomes effective in New Jersey. The law contains a myriad of requirements, including recordkeeping and anti-retaliation provisions, and it prohibits pay disparities based on an employee's membership in a protected class (i.e., sex, race, color, age and religion). The law provides a six-year statute of limitations for pay equity claims (previously limited to two years).

In the absence of a seniority or merit-based system, an employer will not be able to pay different rates of compensation for substantially similar work unless the difference is based on legitimate, bona fide job-related factors that are also based on business necessities. These factors include training, education, experience or performance. However, these factors cannot perpetuate a differential in pay or be based on any protected class. Also, these factors must be reasonably applied and must explain the entire wage differential.