Why it matters

Lawmakers in New Jersey have been busy recently, enacting an expansive new equal pay law in the state, as well as a paid sick leave law. Governor Phil Murphy signed the pay equity bill into law in late April, amending the state’s discrimination statute to forbid discrimination on the basis of any protected class “for substantially similar work when viewed as a composite of skill, effort and responsibilities.” Employers have the burden of proving that any difference in pay is due to a bona fide seniority system, merit pay or other reason not based on a protected classification. The statute also extends the time period for compensation discrimination actions, with each paycheck resetting the statute of limitations going back six years, and makes treble damages available for successful plaintiffs. Just a few days later, New Jersey became the tenth state to enact a paid sick leave statute. Beginning on Oct. 29, 2018, employers will be required to provide workers with one hour of paid sick leave for every 30 hours worked, at the same rate of pay with the same benefits normally earned. Annual accrual, use and carryover of earned sick leave—which can be used for multiple reasons, including care for a family member—are capped at 40 hours each year.

Detailed discussion

Greatly expanding the protections for equal pay in the state, New Jersey Governor Phil Murphy signed the Diane B. Allen Equal Pay Act into law on April 24. The measure amends the New Jersey Law Against Discrimination (NJLAD) to forbid discrimination in “compensation or in the financial terms or conditions of employment” on the basis of any protected class “for substantially similar work when viewed as a composite of skill, effort and responsibilities.”

Pursuant to the law, employers shoulder the burden of proving that any difference in pay is based on the delineated exceptions for, for example, a bona fide seniority or merit pay system, with wages and other compensation compared across “all of an employer’s operations or facilities.”

Under a third exception, employers would need to prove the difference in pay is based on one or more legitimate, bona fide factors other than characteristics of the protected class (such as training, education or experience, or the quantity or quality of production); that these bona fide factors do not perpetuate a differential in compensation based on sex or any characteristic of members of a protected class; that each of the factors is applied reasonably; that one or more of the factors account for the entire wage differential; and that the factors are job-related with respect to the position in question and based on legitimate business necessity.

Employers are prohibited from reducing rates of compensation to higher-paid employees to comply with the statute.

In addition to broadening the scope of protection, the law also extends the time period for plaintiffs to bring suit. Similar to the federal Equal Pay Act (EPA), the state law permits the statute of limitations to reset with each allegedly discriminatory paycheck and then goes one step further, allowing back pay for not just two years (like the EPA) but up to six years.

Successful plaintiffs are automatically entitled to treble damages under the new law, which also forbids the contractual shortening or waiving of any rights provided to employees.

The statute—which takes effect on July 1, 2018—also contains expanded protections for whistleblowers. Employees who share relevant information with governmental entities or legal counsel, or disclose or discuss pay information with co-workers, are protected from retaliation.

Just a few weeks later, Governor Murphy signed a second bill into law impacting New Jersey employers, creating the right to paid sick leave in the state. Effective Oct. 29, 2018, the Paid Sick Leave Act requires employers to provide employees with one hour of paid sick leave for every 30 hours worked, “at the same rate of pay with the same benefits as the employee normally earns.”

Annual accrual, use and carryover of earned sick leave is capped at 40 hours per year.Nothing in the law mandates that employers pay employees for accrued but unused sick leave upon the worker’s separation from employment.

Sick leave may be used for “the diagnosis, care, or treatment of, or recovery from an employee’s mental or physical illness or injury” as well as preventive medical care and care for a family member. “Family member” is broadly defined to include children, grandchildren, parents, grandparents, civil union and domestic partners, and “any other individual related by blood to the employee or whose close association with the employee is the equivalent of a family relationship.”

Other permitted uses of sick leave include school-related conferences or functions in connection with a child, circumstances related to domestic or sexual violence, and leave taken when the employee is unable to work because of a public health emergency.

If the use of earned sick leave is foreseeable, employers may require advance notice; if the reason for using earned sick leave is not foreseeable, employers can require notice “as soon as practicable.” Employers may require reasonable documentation that the leave is being taken for a permitted purpose where three or more consecutive days off are requested.

In addition to containing specific recordkeeping and notice requirements, the law also prohibits discrimination or retaliation based on the use of paid sick leave.

To read the Diane B. Allen Equal Pay Act, click here.

To read the Paid Sick Leave Act, click here.