New Jersey Pay Equity Blog
New Jersey is one of few states with a strong focus on pay equity. Rather than only focus on the fight for equal pay based on sex and race, New Jersey is taking it a step further with a fight for equal pay based on all factors mentioned in the Law Against Discrimination (LAD). In addition to sex and race, color, national origin, age, marital status, sexual orientation, genetic information, pregnancy, gender identity, and disability are just some of the additional protected categories that LAD also covers. When discussing pay equity, the LAD should be used as a guideline.
Employers cannot justify unequal pay that violates any protected characteristics in the LAD. This does not limit employees to the right of equal pay in salaries, but also in benefits. For example, a male electrician and a female electrician must be compensated equally for performing the same job. If a female worker was to become pregnant, the company could not hire another individual and pay her more for the same job as the pregnant employee.
The Pay Equity Law also states that “substantially similar” work must be paid the same. These jobs may not have the same title or even the same exact job description, but if found to be similar enough, employees must be paid the same. For example, a maid and a janitor working for the same company, though somewhat different, would be required to receive the same compensation. This is an example of the concept of equal pay for equal work.
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There are a few exceptions when it comes to paying employees working the same (or similar) jobs differently. Different pay can be justified by seniority, a merit system or a bona fide factor. Seniority deals with how long an employee has been with the company. He or she may have had the same original starting pay as another employee, but due to time spent with the company, the pay is increased. Promotions through a merit system also allow for different pay compensations for employees. These employees may receive greater pay due to superior performance at work.
Bonafide factors are other ways in which an employer can choose to pay one employee more than another. These may include education, experience, training and quality or quantity of work. For example, someone with a Master’s degree may be paid more than someone with a Bachelor’s degree. Someone with no degree at all may be paid less than someone with a degree. Experience also plays a key to pay differences. An IT manager with 10 years’ experience would most likely be paid more than one with only 2 years experience.
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As long as employers can properly justify the difference in pay between employees, there is no issue with the Law. However, if there is a pay difference amongst employees that cannot be justified, it can’t be solved by lowering the pay of the higher paid employee. The employee that was paid unfairly would be entitled to three times the amount of pay differential. This is also known as treble damages. Employees can seek back pay for up to six years of unfair pay violations. This is a larger time period than the federal Law’s allowance of two years. The employer can also face several penalties for violating Pay Equity Laws. It is $10,000 for the first offense, $25,000 for the second, and $50,000 for the third offense.
An additional aspect of New Jersey’s law is the Salary History Ban. Employers are prohibited from asking applicants for salary history. It is unlawful to screen candidates based on salary. This includes, but is not limited to prior wages, commission, and benefits. Applicants are allowed to share salary history on their own terms. Sharing this information must be completely voluntary by the applicant. When it comes to switching jobs within a company, the employer will legally have access to the employee’s salary history, which is permissible. Publicly available salary history can also be obtained.
Employers who violate the Salary History Ban Law will face penalty charges. The fines can be up to $1,000 for the first, $5,000 for the second and $10,000 for the third offense. To avoid fines, employers should remove any salary history questions from applications. Employees involved in recruiting, hiring or in setting the pay for employees should be trained to do so without the use of prior salary knowledge and be alerted of this new legislation.
More considerations that employees should include when it comes to obeying NJ Pay Equity Laws are establishing guidelines for pay and documenting reasons for pay differences. Written guidelines help to remind those involved in the hiring and paying processes what is and isn’t permitted under the law. Written documents help to ensure proof of reasonable payment differentials if ever brought into question. These precautions can help employers avoid lawsuits and fines in the long run.