New Jersey Employees Have a Powerful New Tool to Fight Gender Pay Discrimination

On August 30, 2012, Governor Christie signed legislation aimed at fighting wage discrimination. The new law, which has been incorporated into New Jersey’s Law Against Discrimination (“LAD”), provides employees with another powerful tool to use against employers.

The new law makes it illegal for an employer to retaliate against any employee who discloses to any other employee, former employee, or their authorized representative, certain information, such as the job title, occupational category, and rate of compensation (including benefits), or the gender, race or other characteristics of the employee or former employee, if the disclosure was made for the purpose of investigating the possibility of pay or compensation discrimination. This ban on compensation secrecy is designed to help employees investigate discriminatory compensation practices, which, according to recent studies, has widened in the last two years. The new law is based on the Paycheck Fairness Act, federal legislation intended to expand the scope of the federal Equal Pay Act that has been rejected twice by Congress.

For New Jersey employers, the immediate impact is the need to revise any personnel policy and/or practice that unconditionally prohibits or discourages employees from discussing or sharing wage information. Because the new law is part of the LAD, all of that statute’s powerful remedies are available to employees who prove that they experienced retaliation in response to an effort to discuss or share information regarding compensation. Accordingly, New Jersey employers would be well-advised to immediately: (1) revise any policy or practice that requires a blanket prohibition against wage-related discussions, and (2) make sure that supervisors know that certain wage-related discussions are now protected by state law.

The important, albeit vague, limitation on this new ban on compensation secrecy provides: the law only protects compensation-related disclosures “made for the purpose of investigating the possibility of pay or compensation discrimination.” However, the ban on compensation secrecy has been effectively prohibited by the National Labor Relations Act (NLRA) for years, as a violation of employees’ right to concerted activity.

Now, with the state law prohibiting compensation secrecy employees may become more assertive in their efforts to investigate and sue for perceived gender pay discrimination. As a result, because the amendment to the LAD is far more powerful and accessible than an NLRA claim, it is imperative that employers not react adversely when employees engage in the protected act of sharing compensation-related information.