Employment Law Blog

The Importance of Engaging in a Pay Equity Study

February 4, 2019

Background on the Need for a Pay Equity Study
The recent passage of the Diane B. Allen Equal Pay Act (the “Act”) amended the New Jersey Law Against Discrimination (“LAD”) to strengthen protections against employment discrimination and to promote equal pay for women and employees in other protected categories. The Act became effective on July 1, 2018. Being proactive under these new strict protections is of the utmost importance. As such, If you are a New Jersey employer, we urge you to engage in a “pay equity study.” The goal of which would be to develop an understanding of the Company’s current pay structures, and to either explain differences in pay among comparable employees or to correct pay differences that cannot be justified. Mandelbaum Salsburg's employment law attorneys stand ready to assist in this capacity.

It is now an unlawful employment practice under the LAD for an employer to pay any employee who is a member of a protected class less than the rate paid to other employees not members of that protected class for “substantially similar work when viewed as a composite of skill, effort and responsibility.” The Act does much more than just advocating gender pay equity. It expands equal pay on the basis of membership in the protected classes of the LAD, to include race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces.

Limited Exceptions
There are very limited exceptions where an employer may pay a different rate of compensation to members of the protected class, including where a pay differential is due to seniority or a merit system. In all pay discrepancies, the employer must demonstrate each of the following:

1. That the differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class, such as training, education or experience, or the quantity or quality of production;
2. That the factor or factors are not, and do not perpetuate differential in compensation, based on sex or any other characteristic of members of a protected class;
3. That each of the factors is applied reasonably;
4. That one or more of the factors account for the entire wage differential; and
5. That the factors are job-related with respect to the position in question and based on a legitimate business necessity.

What Exactly is Unlawful?
The Act provides that an unlawful employment practice occurs each time pay practices discriminate against an employee, and the employee can seek back pay for up to six (6) years. In this way the Act substantially lengthens the statute of limitations for claims based on pay equity to beyond the LAD’s normal, two (2) year statute of limitations.

If an employer is found guilty of violating the equal pay practices required by the Act, a judge or jury can award treble damages for the violation. Treble damages are also available to an employee who proves that the employer retaliated against her/him for requesting, discussing, or disclosing to (i) any other employee or former employee of the employer, (ii) a lawyer from whom the employee seeks legal advice, or (iii) any government agency, information regarding employee compensation/pay practices. Likewise, treble damages are available to an employee or prospective employee who is asked by the employer to sign a waiver regarding discussing or disclosing pay practices or rates.

A successful claimant will also be entitled to attorneys’ fees in a practice called “fee shifting.”

For all of these reasons, it is necessary to carefully review Company hiring and compensation practices to insure there is pay equity for employees who perform “substantially similar work” –the so-called pay equity study.

Advantages of a Pay Equity Study
A pay equity study will help your company reduce its potential liability by addressing three questions:

• Which pay differences are at issue?
• Whose pay should be compared?
• What are the factors that explain differences in pay?

Specific and complete answers to the last question are critical. Absent being able to provide valid justifications and cogent explanations, your Company is potentially at great risk. The key challenge in finding these answers comes with the realization that the Company’s historic pay decisions were made one at a time, over an extended period of time and depended upon a variety of factors specific to the time at which they were made. Ultimately, the Company must able to explain and justify the cumulative results of all past pay decisions; a potentially difficult task.

Most companies keep a close eye on some of their pay decisions, such as the grant of merit raises and the starting pay of their positions. Unfortunately, tracking individual decisions are not enough. Although the Act refers specifically to pay decisions, in many cases the inability to reach into the past for data means that differences in existing levels of pay likely will be used to support a prima facie discrimination claim. The Act and other such laws refer directly to equal pay for the same work. Thus, how employees are paid today—not just the pay decisions of yesterday or yesteryear—must be examined and understood fully.

How the Process Works
The pay equity review process begins with comparing the pay of employees who are “similarly situated.” But individuals who are comparable today were not always thus. Given that pay today equals pay at hire plus all subsequent changes in pay, including those that emanate from promotion or transfer, employees that today perform similar work, in the not-so-distant past, may have worked in different jobs, different grades, different units, different locations or even different companies. Knowing this history may lead to better understanding, but this alone will do nothing to protect the Company from sustainable claims.

Differences in knowledge, skill, ability, effort or responsibility provide a legitimate basis for differences in pay among employees doing the same work. However, there are few, if any, direct measures of these factors available, and pay equity studies typically rely on the “usual suspects” to explain pay differences. These include:

• Responsibility for people.
• Knowledge.
• Communication skills.
• Physical demands.
• Emotional demands.
• Mental skills.
• Initiative.
• Length of time in job or grade.
• Part-time status.
• Physical/geographic location.
• Company service time.
• Education.
• Prior experience (as measured by age or time between leaving school and hire).

Ultimately, Employers will need in-depth information to effectively explain and defend pay differences. Information that can be collected and analyzed through a pay equity study and maintained at the ready include:

• Work activities: collect information about each job’s actual work activities and responsibilities; this may also include how, why and when the workers perform such activities.
• Human Behavior: this can include the degree of perception exercised by the employee and other human behaviors such as communicating, judgment and writing and speaking skills.
• Skilled (or not) use of Machines, Tools, Equipment and Other Work Aids: this could factor in computer use and literacy, knowledge dealt with or applied and services rendered.
• Job Context: should include such considerations as physical working conditions, work schedule and social factors.
• Human Requirements: this could include job-related knowledge or skills, education, training and/or work experience, and required personal attributes such as aptitude, physical characteristics, personality and interests.

Two caveats: first, the above factors must be dealt with as objectively as possible and, if capable of measurement, must not be tainted by cognitive bias; second, the law specifically does not permit the perpetuation of past discrimination. Thus, basing a hiring pay offer on previous pay, where such previous pay could be tainted, would only propel discrimination into the future. Employees must be placed into the pay scale in a manner that is rational and disciplined.

Ultimately, the adoption and maintenance of job descriptions is an integral part of a transparent, fair pay system. Having accurate job descriptions makes it much easier to evaluate and grade different jobs – and ensure that employees doing equal work receive equal pay. Job descriptions should follow job evaluation scheme factors. This will make jobs easier to evaluate and help avoid aspects of jobs more commonly performed by women being omitted or undervalued in the evaluation process, compared to those of jobs more commonly carried out by men. To the extent that current job descriptions exist, they should be reviewed as part of the preliminary review.

In addition to job descriptions, the second part of this comprehensive analysis involves the development of Salary Guides for all identified positions. One of the required Affirmative Action Plan reports, the Workforce Analysis, requests that the Company sort the jobs in each Department by wage or salary. Salary Guides are used by many businesses to help managers manage the compensation of new employees and to establish appropriate pay increases for existing employees while maintaining equity among the jobs in the company. Salary Guides provide a structure and logic for fairly compensating employees and managing the Company’s payroll costs.

Mandelbaum Salsburg’s Employment Law Practice can provide assistance and advice and help companies conduct this important survey. Involvement of legal counsel will provide you with necessary expertise and the protection of attorney-client privilege. If engaged, we would be prepared to work with one or more Company executives to review personnel information and compensation data. While it is clear that this process is no easy task; to do nothing (our usual default option) can lead to some very serious consequences. If you wish to learn more or to engage in this process, please contact Gary S. Young at gyoung@lawfirm.ms.

Attorney: Gary Young
Category: Equal Pay Act

Tis the Season to be Careful, Fa-la-la-la-la, la-la-la-la

December 7, 2018

Company holiday parties are often great for camaraderie and employee morale but are fraught with danger, whether it be harassment, religious discrimination or drinking and driving.

We don’t want to be accused of being the Grinch that stole Christmas. We are all in favor of holiday parties, so long as they are done right. Here are our top ten (10) tips:

1. Remind employees in advance of the Company's anti-harassment policy;

2. No mistletoe;

3. Limit alcohol;

   1. Consider no alcohol or using drink tickets

   2. Designate a member of management to monitor employees

   3. Have rides home available or remind employees to consider Uber/Lyft, etc.

   4. Consider day-time parties

4. No slow dancing;

5. No unsupervised speeches or skits;

6. Avoid religious symbols and religious music;

7. If during off hours, do not require attendance or there may be exposure to wage and hour claims;

8. If exchanging gifts, instruct employees as to what is appropriate and no gag-gifts;

9. When selecting a menu, make sure it is inclusive to accommodate religious needs, i.e. Kosher meals; and

10. If all else fails, promptly investigate any claims!

Attorney: Steven Adler
Related Practice: Labor and Employment
Category: Harassment

Equal Pay Act Compliance

November 21, 2018

Without question, the most aggressive and wide-ranging Equal Pay Act in the country was enacted this past year by the New Jersey Legislature. It is wide-ranging because it applies not only to pay disparity based on sex, but also based on an employee’s race, age, religion, disability, or any other classification of employees who are protected from discrimination in employment by the New Jersey Law Against Discrimination (“NJLAD”). There are more than a dozen such classifications.

It is the most aggressive Equal Pay Act because it goes far beyond the concept of “equal pay for equal work.” An employer must pay an employee, who is in any one of these protected classifications, equal to any employee who is not so-protected, if the work the two employees perform is “substantially similar,” that is, nearly equivalent or approximately the same work. This also applies to equality in terms of other benefits, such as health insurance.

Compliance with the Act effectively requires that the employer conduct an analysis of its entire workforce, and on an ongoing basis, as new employees are hired and/or changes are made in the workforce.

The Act provides truly draconian penalties, in terms of treble damages and the employer having to pay the employee’s attorneys’ fees.

The Labor and Employment Law Department has been assisting a number of its clients, along with Human Resource consultants we have retained, to perform the detailed workforce audits required to comply with this Act.

Attorney: Dennis Alessi
Related Practice: Labor and Employment
Category: Equal Pay Act

Diane B. Allen Equal Pay Act: A Compliance Nightmare

October 8, 2018

The Diane B. Allen Equal Pay Act (“the Act”) is unique from other employment anti-discrimination laws in New Jersey which creates a compliance nightmare for employers. It is important to understand the four main differences of the Act and the challenges they bring.

First, the Act is not an equal pay for equal work law. It is actually an equal compensation for substantially similar work law. Employees, who are in those categories protected from employment discrimination under the New Jersey Law Against Discrimination (“NJLAD”), must receive not only equal pay, but also equal employment benefits, (i. e., insurances, retirement plans, paid time off, severance pay, etc.), when these protected employees perform substantially similar work as employees who are not protected by the NJLAD. This comparison must be made based on a composite considerations of skill, effort and responsibility.

“Similar work” is not the same as equal work. Similar work means almost or nearly the same work. And “substantially” means in most respects but not in all. Consequently, if an employee, who is in a category protected by the NJLAD, performs almost the same work in most respects as an employee who is not in a protected category, then this protected employee must receive equal salary and all other benefits of employment.

Deciding what equal work is appears to be an easy task by comparison to this type of analysis which an employer must perform to ensure compliance with the Act.

Secondly, the Act is not an anti-discrimination law for women in the workforce. It was initially proposed as such but, as ultimately enacted, it applies to all approximately 14 categories of employees who are protected against employment discrimination by the NJLAD. (Just some of these protected categories include, in addition to women, race, color, national origin, age, religion, disability, family and marital status, veterans status, and sexual orientation, among others.) This means that an employer with any degree of diversity in its employees must analyze its entire workforce to ensure compliance with the Act.

Third, the Act does not appear to require that the employer have any intent to discriminate. Apparently, for an employer to have violated the Act, an employee need only prove that he/she is a member of a protected category under the NJLAD; that the employee performed substantially similar work as another employee who is not in a protected category; and that this protected employee received less compensation, in salary and/or in any benefits of employment, as the employee not in a protected category.

Admittedly, an employer can raise three defenses: that the differential in compensation is due to a seniority system, a merit system, or some legitimate, bona fide and job-related difference(s) in characteristics between the employees in the protected categories and those that are not so protected. For example, inequality in compensation does not violate the Act if it is directly and wholly the result of job-related differences in training, education, experience or the quantity and quality of production. Obviously in many situations these differences will be subjective; difficult to measure; will require extensive supporting documentation developed over time; and the burden will be on the employer to prove them.

Fourth, the most distinctive and troublesome aspect of the Act is what actions employers must take to comply with it. For most employment discrimination laws an employer need only adopt a personal policy to implement the law, and then follow the policy wherever situations arise to which the law applies. But with the Act, an employer needs to implement and maintain, on an on-going basis, a comprehensive compliance plan.

The plan necessitates a comparative evaluation of the education, training, knowledge/skills and experience of each employee and their individual productivity; an analysis of the duties, tasks and responsibilities of each position in the workforce; then a determination of which employees in which positions are performing substantially similar work. Once these substantially similar employees are identified, then the final step, undoubtedly the easiest, is to determine if the salary and other benefits of these employees are equal as between protected and non-protected categories of employees under the NJLAD. (The employer cannot reduce the compensation of the higher paid substantially similar employee; but must raise the compensation of the lower paid employee).

Such an in-depth analysis of an entire workforce is a monumental task for an employer, even with a fully staffed HR Department. We appreciate the even greater difficulty for an employer with far less HR resources. Nevertheless, the need for compliance is of paramount importance because of the severe penalties for a failure to do so. These include trebel damages (i.e., the employee receives three dollars for each dollar of equal compensation which the employee did not receive in violation of the Act), and the employer having to pay the employees attorneys’ fees.

In addition, the Act provides a six (6) year statute of limitations, and allows an employee to potentially claim damages for even a longer period of time in the past under the “discovery rule.” This rule means that the six (6) year statute of limitations only begins to run after the employee discovers that he/she was not paid equally. Finally, a separate violation of the statute occurs each time the employer issues a paycheck which is less than equal pay for substantially similar work.

The “bottom line” is that, while implementing a compliance plan for the Act may be a nightmare, failure to comply could be a real life horror show for any employer.

Attorney: Dennis Alessi
Related Practice: Labor and Employment
Category: Discrimination

Class Action Liability Risks for Violations of ADA and New York Human Rights Laws

July 6, 2018

In January 2018, the federal government conformed its website accessibility requirements to the Web Content Accessibility Guidelines (WCAG), an international set of standards intended to make web content more accessible to users with perceptual or physical challenges. The WCAG addresses low vision, color perception, cognition, manual dexterity, screen reading technology, and other issues related to user abilities. The Department of Justice (DOJ) promised to do the same in the private sector by mid-year, but that initiative has been deferred.

As a consequence, there has been a surge of class action lawsuits alleging Americans with Disabilities Act (ADA) violations based on access to website information that the Courts have been addressing individually. The first federal court decision that a website violated the ADA was in early 2017. The decision was followed by 800 federal lawsuits that year alone, alleging ADA as well as state law civil rights violations. (New York led the way with more cases than any other state). Until a clear standard is set by Congress or the appropriate regulatory agency, web site ADA lawsuits will continue to increase.

The ADA prohibits discrimination on the basis of a disability “in places of public accommodations”.  As such, any business is potentially an ADA class action target. Class actions require only one named plaintiff (who brings suit individually and on behalf of those “similarly situated”), and one defendant (potentially, you). Whether you are a large or small business, brick and mortar, or web-based only, defending an ADA/Human Rights Law class action promises to be costly in two ways. Not only is there the risk of a potential damage award, the ADA is a “fee shifting statute.” As a result, a defendant must pay its own legal costs to defend the action and may be required to pay those of a successful plaintiff as well. These costs alone may run into the tens or hundreds of thousands of dollars.

Now, with the website accessibility lawsuit floodgate open, it imperative for businesses to ensure ADA compliance. The easiest and most economical approach is a website compliance audit and action-item checklist conducted by legal counsel experienced in ADA website accessibility issues. For instance, does your website include:

• Visual Alternatives (pre-recorded text for audio, descriptors for images)
• Sound alternatives (text descriptors for audio)
• Color Contrasting (that meet the minimum ratios)
• Key board navigation (i.e. function and/or tab key, not mouse-only options)
• Adjustable font size (without content or acuity loss)
• Semantic HTML (descriptive headings that identify the content that follows)

Many of these features are easy (and inexpensive) to implement once you (and your website consultant) know what is required. Please contact the firm’s cybersecurity practice attorneys Steven Teppler or Lauren Topelsohn to discuss our fixed fee consultation details.

Attorneys: Steven Teppler and Lauren Topelsohn
Related Practice: Labor and Employment

Notorious R.B.G. and Gender Equality

May 26, 2018

Today we are not blogging about a recent development in employment law.  Instead, we wish to call attention to an entertaining source to help non-lawyers understand how we arrived at the current state of the law concerning gender equality.

A must-see movie, regardless of your political persuasion, is the documentary R.B.G. which premiered at the 2018 Sundance Film Festival.  The movie starts off with a bang when the notorious Ruth Bader Ginsburg quotes abolitionist and women’s suffragist Sarah Grimke’, stating that she asks “…no favor for my sex.  All I ask of our brethren is that they take their feet off our necks.”

Ginsburg, the diminutive dynamo, was one of only nine women in a class of 500 at Harvard Law School and the first woman on the Harvard Law Review.  She accomplished this feat while caring for her ill husband and young child.  Ginsburg did for gender discrimination in the 1970’s what Thurgood Marshall accomplished for blacks during the civil rights movement in the 1960’s. 

The movie chronicles Ginsburg’s quest for equal protection for women, including the six cases she argued before the Supreme Court (five of which she won), including United States v. Virginia, in which the Supreme Court held that qualified women could not be denied admission to the all male Virginia Military Institute.  Ginsburg also trumpeted male gender equality by successfully arguing in Weinberger v. Wiesenfeld, 420 U.S. 636 (1975) that widowed fathers were entitled to the same benefits under the Social Security Act as widowed mothers.  More recently, Ginsburg has been a dissenter to many decisions rendered by our conservative Supreme Court, including in the Lilly Ledbetter equal pay case.  While the Supreme Court denied Ledbetter relief, Ginsburg’s dissent resulted in Congress creating new law effectively overruling the Supreme Court’s majority decision and making it easier for women to sue for previously unknown disparate pay.

The #MeToo movement has resulted in the media refocusing on gender discrimination and harassment. The R.B.G. documentary does an excellent job of explaining how we arrived at the current state of the law and Ginsburg’s role in shaping gender equality.  

Attorney: Steven Adler
Related Practice: Labor and Employment

Governor Phil Murphy's first act as governor was to sign an executive order promoting equal pay for equal work by prohibiting state agencies from asking job applicants about their salary history

April 23, 2018

The Governor is now about to sign legislation amending the New Jersey Law Against Discrimination (“NJLAD”) that will ban employers from paying women and other employees in a protected category less for “substantially similar work.” Rather than a two year statute of limitations, like other types of discrimination, this amendment provides for a six year statute of limitations for these pay disparity claims.  It also calls for treble (triple) damages.  The law also provides that employers cannot preclude employees from discussing their compensation.  Finally, it precludes employers from requiring employees to agree to a shorter statute of limitations for any claims under the NJLAD or to waive any other protections provided by that law.  A copy of the Bill is attached here.

Attorney: Steven Adler
Related Practice: Labor and Employment
Category: Wage & Hour