New Equal Pay Law on the Horizon in the Garden State

A new pay equity bill passed by the New Jersey State Legislature would significantly increase the potential liability of employers doing business in New Jersey by amending the Law Against Discrimination (LAD) to make it unlawful to have any employment practice that discriminates on the basis of sex in "compensation or in the financial terms or conditions of employment" for the performance of "substantially similar work, when viewed as a composite of skill, effort and responsibility."

If signed by Governor Christie, the law would go beyond the existing protections afforded to employees by the federal Lilly Ledbetter Fair Pay Act of 2009 (LLFPA) and New Jersey law.

Perhaps the most significant change in the New Jersey pay equity bill is the adoption of what is, in effect, an unlimited statute of limitations. Under the proposed law, liability would be triggered "for the entire period of time in which the violation with regard to discrimination in compensation or in the financial terms or conditions of employment has been continuous, if the violation continues to occur within the statute of limitations."

Under existing state and federal law, employees may go back only two years. As such, the new law would go beyond not only the LLFPA but also the New Jersey Supreme Court's own precedent in Alexander v. Seton Hall University, 204 N.J. 219 (2010), where the court held that plaintiffs' discriminatory wage claims under LAD were timely at least with regard to the wages that were paid within the two-year statute of limitations period even though the original unlawful pay decision was made before that period. The Alexander court further held that the "continuing violation" doctrine could not revive any such claims if no discriminatory wages were actually received within that two-year limitations period. Under the proposed legislation, employees would be able to pursue claims for backpay going back decades if the "discrimination in compensation or in the financial terms or conditions of employment" was continuous.

Secondly, the state Legislature's bill would turn on its head the traditional burden of proof that exists under most employment laws at both the state and federal levels. Under the new law, there would be a presumption of illegal discrimination where any employee of one sex is paid less in wages/benefits than a similarly situated employee of another sex. To justify unequal compensation of any two similarly situated employees of the opposite...