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The Equal Pay Act is not just for women anymore. (Part 2)

In the first installment of our update to the New Jersey Equal Pay Act (the “Allen Act” or “Amendment”), we addressed the differences and similarities in the facts relevant to the analyses under the old regime as compared to the new. In this second installment, we address the differences in damages that may be recovered, as well as the changes to the statute of limitations.

Under the prior Equal Pay Act, the employee could recover “the full amount of the salary or wages due from the employer plus an additional equal amount as liquidated damages, together with costs and such reasonable attorney’s fees as may be allowed by the court.” (1) Further, our Supreme Court has made clear that “the two-year personal-injury statute of limitations should apply” to “all Law Against Discrimination claims,” which of course include claims under the EPA.(2)

Under the Allen Act, however, each pay check where there is a pay disparity represents a potential violation, and “an aggrieved person may obtain relief for back pay for the entire period of time” up to six years where the “violation . . . has been continuous,” provided the violation continues” within the two-year statute of limitations.(3)  Of note, the continuing violation and discovery rule are also expressly preserved in the Amendment.

Further, if an employer is found by a jury or the Division of Civil Rights to have violated the Allen Act, either by allowing a prohibited pay disparity to persist or by retaliating against an employee for exercising or attempting to exercise their rights under the Amendment, the employer is required to pay triple damages to the claimant.(4)

Apart from the requirement to compare the wage of the claimant to the wages of the entire employer’s operations or facilities (which is discussed in our previous installment), it is unclear what changes there will be to an employer’s defenses.  Presumably, the Allen Act is based upon the same assumption as the prior version of the EPA – that disparate pay for substantially similar work creates a “virtually inescapable inference” of impermissible discrimination.(5)    As under the prior EPA, employers may have different rates of pay for their employees based on nondiscriminatory factors.

Under the prior EPA, the burden shifts to the employer to justify the pay differential; specifically, that the pay differential falls into one of four categories: (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) a differential based on any factor other than sex.,(6,7)  Unlike other claims under the LAD, which does not establish an evidentiary burden at this stage, the employer must show the pay disparity falls into one of these categories by a preponderance of the evidence.,  (8,9)

The Allen Act takes a similar approach.  Employers must show the pay differential is “based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class.”  Such factors include “training, education or experience, or the quantity or quality of production.” However, the factors offered by the employer must meet the following statutory requirements:

  • they must be “applied reasonably”;
  • they may not be based upon nor perpetuate a differential based on any characteristic of members of a protected class;
  • they must “account for the entire wage differential,” and
  • they must be “job-related with respect to the position in question and based on a legitimate business necessity.”

Notably, neither “applied reasonably” nor “legitimate business necessity” are defined; but the Amendment helpfully excludes any factors for which an “alternative business practice[] that would serve the same business purpose without producing the wage differential” is shown.(10)

Accordingly, the employer’s defenses under the Allen Act are at once broader and more circumscribed than they were under the previous regime.

The takeaway here is that pay disparity claims are not limited to gender-based disparities; however, claims under the Allen Act are if anything more fact sensitive than claims under the prior version of the EPA.  If you have reason to believe that you have been paid less due to your membership in a protected class, don’t hesitate to Attorneys Hartman for advice and assistance.

(1)  N.J.S.A. 34:11-56.8
(2) See Montells v. Haynes, 133 N.J. 282, 286 (1993); Fujita v. Yamanashi, 2016 N.J. Super. Unpub. LEXIS 413 (App. Div. Feb. 25, 2016); see N.J.S.A. 2A:14-2.
(3) See Allen Act, Subsection 11(a).
(4) See Allen Act, Subsection 12.
(5) See Grigoletti, supra, 118 N.J. at 108-09.
(6) Id. at 102, 109-10 (citing 29 U.S.C. § 206(d); Corning Glass Works v. Brennan, 417 U.S. 188, 196 (1974))
(7) Notably, the “any other factor” category has been construed by our Appellate Division to mean essentially the same thing as the “legitimate non-discriminatory reason” under Title VII. Bitsko v. Main Pharmacy, Inc., 289 N.J. Super. 267, 279-80 (App. Div. 1996)
(8) Grigoletti, supra, 118 N.J. at 102.
(9) The rationale for the imposition of this burden of proof is based primarily on the observation that, in pay disparity cases, only the employer can explain the reason for the pay differential, and therefore “it is only fair to require the employer to persuasively articulate that reason and dispel the inference of invidious discrimination.”Id. at 109.
(10) See Allen Act, Subsection 11(t)(5).

J.E.

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J.C.

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