Diane B. Allen Act Ensures Equal Pay for All New Jerseyans

(Photo: Andrew Maclean/NJ Advance Media)

New Jersey’s Equal Pay Act Went into Effect July 1, 2018

In late April, New Jersey Governor Phil Murphy signed the New Jersey Equal Pay Act, formally known as the Diane B. Allen Act, into law. The new regulation, which took effect on July 1, makes it illegal for employers, of any size and type, to provide different levels of pay to employees whose job provides the same or similar benefit to the employer. This new regulation mandates that employers provide equal pay to women and minorities, but extends beyond.

The Allen Act is now recognized as one of the most progressive equal pay laws in the country. While difficult to identify, research shows that wage discrimination against women is pervasive. A 2017 Pew Research Center survey found that one in four employed women claim that they earn less than a man for the same job, while just five percent of men say they earn less than a woman doing the same job. For New Jersey, data shows that women are paid 82 cents for each dollar a man earns. That gap is even greater for African American and Hispanic women, who are paid 58 cents and 48 cents respectively, than that of a white, non-Hispanic male.

Therefore, what do employers, whether public/governmental entity or private corporation, need to know?

  1. The new law covers more than just women. The Diane B. Allen Act is a major revision to the former New Jersey Law Against Discrimination, which not only protects women, but also protects employees based on race, creed, national origin and/or current nationality, marital status, sexual orientation, gender identity, and disability.
  2. The new law allows victims of wage discrimination to recoup up to six years of back pay differential. This provision extends the back pay time period by four years and, as a result, motivates employers to more closely examine pay practices and correct any irregularities that may be found.
  3. The law protects employees who discuss compensation with co-workers. Employers should understand that this provision creates the enhanced possibility that employees may more easily become aware of pay differential, resulting in a larger number of pay discrimination claims. This motivates employers to analyze their compensation scales/guides to ensure equitable pay practices. Under the new law, employers are prevented from mandating their employees sign a non-disclosure agreement.
  4. Employers can still set salaries based on a merit-based system. In the end, employers are not required to pay everyone the same. They can still structure a merit-based compensation system that takes into account practical experience, education, and even the quantity and quality of the employee’s work when setting their pay. Employers should regularly review employee compensation to ensure employee groups with similar qualifications receive fair and equitable pay. Prompt compensation updates must be made when a disparity is identified, with the compensation of the lower paid employee raised to the level of the higher employee.

“From our first day in Trenton, we acted swiftly to support equal pay for women in the workplace and begin closing the gender wage gap,” said Governor Murphy when he signed the bill into law in April. “Today, we are sending a beacon far and wide to women across the Garden State and in America – the only factors to determine a worker’s wages should be intelligence, experience and capacity to do the job.  Pay equity will help us in building a stronger, fairer New Jersey.”

For the full text of the Diane B. Allen Act, click here. For an employer primer on the legislation, click here.