On July 1, 2018, the Diane B. Allen Equal Pay Act (“Act”), one of the strongest equal protection pay laws in the Country, will become effective. The Act prohibits all employers from paying any member of a “protected class” at a lower rate of compensation, including benefits, than the rate paid to employees who are not members of a protected class and who perform substantially similar work when viewed as a composite of skill, effort and responsibility, unless the differential is based upon a neutral-based seniority or merit system.  Employers that do not have or fail to institute a neutral-based compensation system will be required to satisfy five (5) different factors to support compensation variances if an employee alleges pay differential discrimination.

This Act expands protections to all protected classes, including race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy, sex, gender identity/expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces. There is no grandfathering clause, and employers that fail to achieve compliance with the Act face significant liability.  If an employer is found to have violated the Act, the prevailing party could potentially be awarded his or her legal fees, treble damages, and up to six (6) years of back pay in addition to any additional relief permitted under the New Jersey Law Against Discrimination (“NJLAD”).

Is your compensation plan compliant with the Act? Do you have a neutral-based compensation plan? Have you evaluated and updated all of your compensation plans? If not, beware of inaction because the Equal Pay Act is almost here.

Should you require a thorough analysis and assessment of your current compensation plans and policies, or require any assistance in crafting updated, neutral-based compensation plans, please do not hesitate to contact our Labor and Employment law attorneys to ensure your compliance with this new, comprehensive law.