Categories: Equal Pay Act
August 9, 2019
On July 25th, New Jersey Bill A1094 was signed into law and will be effective on January 1, 2020. The new law prohibits employers from asking job applicants about past wages or salaries or to screen applicants based upon wage or salary history unless such information is voluntarily offered by the applicant. The law is intended to curb workplace discrimination and wage inequality for women and minorities. It is recognized that women make roughly $10,000 less per year than men. The act of acquiring knowledge of past wages has been found to taint the hiring process by perpetuating prior discrimination. Violations of the new law carry heavy consequences: $1,000 for a first violation, $5,000 for the second and $10,000 per violation after that. Such violations are also violations of the New Jersey Law Against Discrimination and expose employers to lawsuits.
How does this prohibition change the dynamic of the interview process for New Jersey employers? Employers must be cautious about the information that they request. Even oblique wage inquiries can be illegal. Questions on the application such as “applicant’s desired salary” or “applicant’s desired hourly rate” may seem to be directed at the employee’s desire but now might be found to be prohibited as pre-employment offer questions.
Employers may consider salary history in determining salary, benefits, and other compensation, and may verify an applicant’s salary history, if the applicant voluntarily, without employer prompting or coercion, provides salary history. Employers may also, after making an offer of employment which includes an explanation of the overall compensation package to the applicant, request the applicant to provide a written authorization to confirm salary history. However, the applicant may refuse to provide such information without adverse consequence.
Questions regarding wages, salaries, or benefits must be deferred until after the offer of employment has been accepted. These prohibitions do not apply to applications for internal transfer or promotion or knowledge obtained from prior employment with that employer. The prohibition also does not apply to employers acting pursuant to any federal law or regulation expressly requiring disclosure or verification of salary history for employment purposes. Employers may verify disclosures of non-salary information when conducting a background check provided the employer stipulates that salary information is not to be disclosed. Where the application is for a position involving incentive or commission plans, an applicant’s previous experience with incentive and commission plans and the terms and conditions of those plans may be solicited, provided there is no disclosure of the applicant’s prior earnings.
Business owners should now begin preparations for 2020 compliance by reviewing their hiring process, including application forms and questions to be asked during a job interview. This would be an excellent opportunity to critically review the hiring process and to weed out all illegal inquiries that may have remained due to inertia or other forms of inaction. Asking the wrong things, including past wage history, is dangerous and can be costly.
July 30, 2019
We recently blogged about changes in the law concerning equal pay for women. See, U.S. Soccer Team Sues for Equal Pay, March 11, 2019. This included advice concerning steps to take by employers to ensure compliance with the law. See, The Importance of Engaging in a Pay Equity Study, February 4, 2019.
Last Wednesday, four Democratic senators, including Dianne Feinstein (CA), Amy Klobuchar (MN) and Kirsten Gillibrand (NY), proposed a bill known as the Even Playing Field Act to require equal pay regardless of sex for members of United States national sports teams. Finding that the U.S. Women’s national soccer team has outperformed men on the field and generated slightly more revenue than the men’s national team, the women were paid just 38 cents for every dollar paid to their male counterparts. The pay disparity is not unique to soccer. In 2017, the U.S. Women’s Hockey Team threatened to boycott competition if they did not receive a pay raise from its governing body.
In 2016, the U.S. Senate unanimously passed a resolution calling for the U.S. Soccer Federation to immediately eliminate gender pay inequality, but the pay gap persisted thereafter. Based upon the recent success of the USWNT at the World Cup, it appears that their equal pay goal (no pun intended) now will finally find “the back of the net”.
March 11, 2019
We have written a number of times in this blog about recent changes in New Jersey to the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“NJLAD”) relating to equal pay. See our blog from November 21, 2018 concerning the passage of the Diane B. Allen Equal Pay Act amending the NJLAD. See also our February 4, 2019 article on conducting Pay Equity Studies. We also predicted in other publications that lawsuits involving gender equality in terms of pay and working conditions would become more prevalent. Our prediction was prescient.
On March 8, 2019 the U.S. Women’s Soccer Team filed a class action lawsuit in federal court in California under the federal Equal Pay Act (“EPA”) and under Title VII of the Civil Rights Act of 1964 for gender discrimination. It follows a wage discrimination charge of discrimination filed with the United States Equal Employment Opportunity Commission (“EEOC”) in 2016 by five of the U.S. players. In February, the EEOC issued the players a right-to-sue letter.
In the lawsuit, the women complain about unequal pay and disparate treatment from the US Men’s Team in terms of travel arrangements and being required to play on turf fields. This suit is on the heels of a number of suits filed by the US Women’s Hockey Team and Norway’s women’s team‘s successful suit to be paid equally to its men’s counterpart.
The US women allege better results and higher TV ratings than the US Men’s team. However, there are some complicating factors at play here. The US Women’s Team and the US Men’s Team have different collective bargaining agreements. While the men receive higher game bonuses, they are paid only if they make the team, while the women receive guaranteed salaries supplemented by smaller match bonuses. Additionally, FIFA (soccer’s world governing body) pays men’s teams significantly more than women’s teams. In any event, stay tuned. We expect other, similar suits alleging discrimination in pay and working conditions.
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.
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:
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:
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:
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 email@example.com.
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.
October 9, 2018
Every employer in New Jersey, regardless of size, needs a written Paid Sick Leave policy in place and distributed to employees no later than October 29, 2018. Please contact us if you need assistance drafting this policy or updating your other personnel policies.
Whether as stand-alone policies or those accumulated in an employee manual, the following are the types of policies which must, or at the very least should, be in writing in NJ:
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.