New Jersey’s sweeping equal pay law–the Diane B. Allen Equal Pay Act–is scheduled to take effect on July 1. Named for a former Republican state senator, the law applies to all employers in New Jersey regardless of size.

The new law prohibits more than just gender-based pay discrimination. It amends the New Jersey Law Against Discrimination (NJLAD) and makes it illegal for an employer to pay employees who are members of a protected class recognized under the NJLAD at a lower rate than employees who are not members of a protected class for “substantially similar work” unless a pay differential is justified by a legitimate business necessity.

Under the NJLAD, protected characteristics include: race; creed; sex; color; national origin; ancestry; nationality; disability; age; pregnancy or breastfeeding; marital, civil union, or domestic partnership status; affectional or sexual orientation; gender identity or expression; military status; and genetic information or atypical hereditary cellular or blood traits.

“Substantially similar work” is determined by a combination of the “skill, effort and responsibility” required for the position and isn’t limited to employees who work in a specific geographic area or region.

The law allows an employer to make a pay differential only if it demonstrates that:

• The differential is made under a seniority or merit system.
• The differential is based on one of more legitimate, bona fide factors other than the characteristics of members of a protected class–e.g., training, education, experience, or the quantity or quality of production.
• The factors aren’t based on and don’t perpetuate a differential in compensation based on sex or another characteristic protected under the NJLAD.
• Each of the factors is applied reasonably.
• One or more factors account for the entire wage differential.
• The factors are job-related regarding the position in question and are based on a legitimate business necessity.

The new law makes it easier for employees to win pay discrimination cases since all they need to show is that they were paid unequally for “substantially similar” work rather than the previous standard of “substantially equal” work. Employers aren’t permitted to reduce an employee’s compensation to achieve compliance.

Dina M. Mastellone is an attorney with Genova Burns LLC in Newark, New Jersey. She can be reached at dmastellone@genovaburns.com. Allison M. Benz is an attorney with Genova Burns LLC in Newark, New Jersey. She can be reached at abenz@genovaburns.com. Both authors are contributors to the New Jersey Employment Law Letter.