In 2018, an "historic" bill protecting women and minorities in the state from pay discrimination passed both houses of the state and signed by Governor Phillip Murphy. As an amendment to the state Law Against Discrimination, the law applies to every employer in New Jersey, even if it employs only one person.
A sample of statements at the law’s signing ceremony:
"This is a wake-up call for employers."- Governor Phil Murphy
"An owner could lose a business for not complying." - Assemblywoman Pamela Lampitt
"Employers will need to start paying fairly." – Senator Loretta Weinberg
And on the substance, the law:
- makes it unlawful for an employer to offer lower pay and benefits to a worker protected by the Law Against Discrimination, which includes "protected classes" such as women and minorities, compared with others who perform "substantially similar work;"
- prevents employers from disciplining workers who talk about their “compensation” - which includes wages and benefits - with co-workers and lawyers;
- prohibit employers from cutting the wages of higher-paid staff in order to make salaries comparable;
- permits employees, or a group of employees, to recoup up to six years’ worth of back pay, up from two under current law; and
- allows employees to recoup three times as much as they were denied in compensation.
But in New Jersey, 1.8 million workers are employed by small businesses, which comprise 99.6 percent of all businesses in New Jersey. Within this sector, employers with fewer than 10 employees have the largest share of the workforce.
And these employers have little to no knowledge of labor standards and employment laws and often hire and pay impulsively, even idiosyncratically, says John Sarno, president of the Employers Association of New Jersey.
“With an onsite HR-person, its someone’s job to pay attention, to make sure workers are paid fairly and in a non-discriminatory way, even if they don’t know all the legal technicalities,” he says.
“But most small business owners are busy running the business and are not really paying attention. They may ask their accountant or a lawyer they might know – or maybe their spouse who has some corporate experience - but they are not really attuned to [equal pay].”
Sarno surmises that many are not even aware of the equal pay law, unless they are a subcontractor to a government-funded project.
The statute of limitations applicable to suits brought in Superior Court is two years from the time an unlawful employment action occurs, which is typically the last paycheck.
Penalties for violating the law are onerous, including:
- back pay, up to 6 years for wage discrimination
- compensatory damages, including for emotional distress,
- punitive damages,
- mandatory treble (triple) damages, and
- reimbursement for attorneys’ fees.
Sarno says that the law has not expressly prohibited an employer from asking about salary history.
“However, in a litigation it could be argued that such a practice perpetuates discrimination. But this is a complex analysis and presupposes that an initial pay discrimination claim can be successfully made.” he says.
The takeaway for the owner of a small business, according to Sarno:
- Think and act a little more objectively, less arbitrarily, about hiring, how to establish wages and raises and pay workers using criteria that is based on skill sets and performance, as opposed to some personal reason.
- Don’t ask about salary history. If you allow job seekers or current employees to negotiate pay, ALL most have an equal opportunity, not just the top performers or the people who you like.
- And having a good compensation resource for reference won’t hurt. Devoting an hour or so to some analysis will go a long way. If nothing else, you can show good faith and avoid those whopping punitive damages.
Join EANJ for our Premier Course: Key Concepts in Compensation in March 2019