New Jersey recently enacted two important pieces of legislation that meaningfully alter the legal landscape for employers. These bills, which passed by overwhelming majorities in both the New Jersey Assembly and Senate and were signed with enthusiastic support from Governor Phil Murphy, signal a willingness throughout New Jersey government to expand workplace protections for employees. Below is a summary of each, and the steps that employers should take, as soon as practicable, to implement the laws and protect themselves against liability.

The New Jersey Equal Pay Act

On April 24, 2018, Governor Murphy signed into law the Diane B. Allen Equal Pay Act (the New Jersey Equal Pay Act or Act). The Act, which takes effect on July 1, 2018, amends the New Jersey Law Against Discrimination (NJLAD) to provide equal pay protections for certain New Jersey employees. Most importantly, the new protections extend beyond those afforded only to women in other jurisdictions: the Act prohibits discrimination in pay or benefits “because of the 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 because of the liability for service in the Armed Forces of the United States or the nationality of any individual, or because of the refusal to submit to a genetic test or make available the results of a genetic test to an employer[.]”

The Act makes it an unlawful employment practice for an employer “to pay any of its employees who is a member of a protected class at a rate of compensation, including benefits, which is less than the rate paid by the employer to employees who are not members of the protected class for substantially similar work, when viewed as a composite of skill, effort and responsibility.” Other than when utilizing a seniority or merit-based system, employers may only pay employees a different rate of compensation for substantially similar work if the employer can show that:

  1. The pay differential is based on one or more legitimate, bona fide factors, such as training, education or experience, or the quantity or quality of production;
  2. The bona fide factors are not based on, and do not perpetuate a differential in compensation based on, a protected characteristic;
  3. Each bona fide factor relied upon is applied consistently;
  4. At least one bona fide factor accounts for the entire wage differential; and
  5. The bona fide factors are job-related with respect to the position in question and based on legitimate business necessities. However, a bona fide factor based on business necessity would not apply “if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.”

Employers may be liable for discriminatory compensation practices for a period of six years, provided that “discrimination in compensation or in the financial terms or conditions of employment has been continuous[.]” If a jury determines that an employer is guilty of an unlawful employment practice, the Act states that the judge shall award three times any money damages to the aggrieved employee.

Additionally, employers with 50 or more employees must notify employees of their right to be free from pay discrimination. Specifically, employers must post a notice in the workplace in English and Spanish, as well as any other language that employers reasonably believe is the first language of a significant number of their employees, if the New Jersey Department of Labor and Workforce Development provides the notice in such language. Furthermore, employers must provide notice to new hires, and to all employees annually, either via email, printed material such as an employee handbook attachment or flyer distributed at employee meetings, or on a company internet or intranet or website if employees are made aware of the posting and all employees can access the website. The notice provided to employees must include an acknowledgment that employees have received, read, and understood the notice.

As soon as practicable, employers should review their payroll to ensure that employees who are members of NJLAD-protected classes are receiving equal pay for “substantially similar work.” This review must be company-wide, as the Act specifically states that “[c]omparisons of wage rates shall be based on wage rates in all of an employer’s operations or facilities.” Employers should also review policies regarding compensation, benefits, and equal employment opportunity and ensure that they include express prohibitions against pay discrimination and retaliation for asserting rights under the Act. Importantly, protected activity under the Act includes discussing with or disclosing such information to a current or former employee of the employer, a lawyer from whom the employee seeks legal advice or any government agency.

The New Jersey Paid Sick Leave Act

On May 2, 2018, New Jersey joined the expanding group of states requiring that employers provide paid sick leave when Governor Murphy signed into law the New Jersey Paid Sick Leave Act (the Act). The Act, which takes effect on October 29, 2018, requires all employers, regardless of size, to provide 1 hour of paid sick leave for every 30 hours worked, with an annual cap of 40 hours. Notably, the Act prohibits localities from enacting ordinances regarding earned sick leave and pre-empts the 13 municipal ordinances in existence prior to the law.

Employers are not required to permit employees to accrue or use more than 40 hours of earned sick time in any benefit year and are not required to allow the carry-over of more than 40-hours of earned sick time from one benefit year to the next. However, unused sick leave must carry-over to the next year unless the employer offers and the employee chooses to accept payment for unused sick time at the end of the year. A “benefit year” is defined as a 12-month period during which an employee may accrue and use earned sick leave.

Importantly, an employer complies with the Act if it already offers employees paid time off, assuming the accrual rate is equal to or greater than that required the Act and employees can use their earned sick time for the same permissible purposes. Further, employees represented by a union may waive their rights and benefits under the law during negotiations of a collective bargaining agreement.

Unless an employee has accrued sick time prior to October 29, 2018, sick leave begins to accrue on that date or on the date of hire for employees hired thereafter. Individuals may use earned sick leave beginning on the 120th calendar day after their employment commences, or 120 days after October 29 for individuals employed as of that date.

Earned sick time under the Act may be used for: (1) diagnosis, care, treatment of, or recovery from, a mental or physical illness, injury or other adverse health conditions, or for preventive care; (2) caring for, or preventive care for a family member; (3) absences necessary due to the employee or employee’s family member being a victim of domestic or sexual violence (including counseling, legal services, or participation in any related civil or criminal proceedings); (4) time when the workplace, school, or childcare is closed by order of a public official due to a public health concern; or (5) time to attend a school-related function or meeting for a child.

An employer may discipline an employee who uses leave for any reason other than those enumerated above; however, the Act prohibits retaliation because of an employee’s request for, or use of earned sick leave. In fact, the Act provides for a rebuttable presumption of unlawful retaliation if an employer takes an adverse employment action against an employee within 90 days of the employee’s: (1) filing a complaint with the Department of Labor and Workforce Development; (2) informing other employees of an employer’s violation of the Act or the employee’s rights under the Act; (3) cooperating with the Department’s or other person’s investigation of a possible violation of the Act; or (4) opposing any policy, practice, or act that is prohibited by the Act.

If the leave is foreseeable, employers can require advance notice of the date that leave is set to begin and the expected duration. If unforeseeable, employees must give notice as soon as practicable. Additionally, for sick leave of three or more consecutive days, an employer may require that employees provide reasonable supporting documentation.

Employers will be required to post a notice in the workplace once such notice is published by the Department of Labor and Workforce Development. Employers must also give a copy of the notice to employees within 30 days of its publication and also upon request, and new hires must be given a copy upon hire. Finally, employers must retain employee records of hours worked and sick leave taken for a period of five years and, upon demand, allow the department access to those records.

Employers should take steps as soon as practicable to implement paid sick leave plans and policies in accordance with the Act, to the extent they do not already maintain such plans and policies. Additionally, employers that do provide for paid sick leave or PTO should review their plan and policy documents for compliance with the Act. Anti-retaliation policies should be updated to expressly prohibit retaliation on the basis of sick leave or asserting rights under the Act, and all new plan and policy documents should be provided timely to employees.

As always, employers should consult with counsel in the event they have any questions surrounding the implementation of, or compliance with the New Jersey Equal Pay Act and Paid Sick Leave Act.