We are staunch supporters of equal pay for equal work, as we believe every right-minded person should be. But the recently enacted Diane B. Allen Equal Pay Act is something entirely different. Although the title refers to “equal pay,” in fact the statute calls for equal pay for “substantially similar” work; an entirely new standard that we fear will bestow benefits largely on the lawyers litigating its meaning.
When the federal Equal Pay Act and New Jersey’s original Equal Pay Act were enacted, they were aimed at an invidious problem of a different time. Women working on assembly lines, as clerks, as lawyers, were paid less than men doing precisely the same jobs, for clearly discriminatory reasons such as the then-common justification that the men had families to support. As time went by and standards evolved, the concept of “equal” work expanded, but “equal” continued to be the touchstone. Efforts to expand pay equity to the “comparable worth” of jobs were rejected by both elected officials and the courts.
The new Equal Pay Act takes us a step closer to the previously rejected standard of comparable worth. The New Jersey Law Against Discrimination is amended to make it illegal to pay a member of any protected class less than other employees for “substantially similar work.” Substantially similar work is defined as work involving substantially similar skill, effort and responsibility. Defenses are enumerated and narrow: (1) a seniority or merit system; or (2) one or more legitimate bona fide factors such as training, education or quality or quantity of production. However, legitimate factors such as the quality of production are a defense only if (1) those factors are not based upon, and do not perpetuate, differential compensation based on a protected characteristic; (2) the factors are applied reasonably; (3) the factors account for the entire wage differential; and (4) the factors are job related for the position and based on legitimate business necessity, and there is no alternative business practice that would serve the same purpose without producing the wage differential. In other words, it is no longer legal in New Jersey to pay more productive employees more money if that results in members of some other protected group (a different sex, race, national origin, religion, disability, marital status, sexual orientation, etc.) making less as a group, unless the employer can prove that there is no other way to set wages that would not have a similar impact. Employers that are found in violation of this amorphous and statistics-driven standard are subject to a six-year statute of limitations and treble damages, in addition to the usual compensatory damages and counsel fees.
How well-intentioned employers are to go about complying with this statutory mandate is as yet a mystery. Is the job of a corporate lawyer who commands $1,200-an-hour fees substantially similar in skill, effort and responsibility to an environmental lawyer who is billed at half that much? Must employers continually calculate the comparative compensation of each protected category of employees to determine whether there are any differences, and if so whether there is any other way to set wages that would eliminate those differences? And how will judges and juries determine what is and is not “substantially similar” work?
Our Legislature was certainly well-meaning in enacting the Equal Pay Act, but they should have thought more about the practical impediments to compliance and enforcement, and the impact on businesses in our state. Unequal wages based on sex or any other protected characteristic are an evil that we should continuously work to eliminate through societal, legislative and judicial means, but thrusting New Jersey businesses into a morass of statistics and litigation is not the right answer.