Post-pandemic hiring: Ensuring compliance with Diane B. Allen Equal Pay Act as COVID restrictions ease

The COVID-19 pandemic has been difficult for everyone in a multitude of ways. However, some groups have been more adversely affected than others — including in the employment realm. Statistics show that, overall, women and minority workers have been disproportionately impacted by COVID-related unemployment and layoffs. The pandemic has greatly affected areas of work in which female and minority employment is more concentrated, such as hospitality, health care, restaurants and retail establishments, in which many employers were forced to close their operations and where telework is not feasible as an alternative working arrangement. Additionally, COVID-related school closures have more heavily impacted female employees, who are often more likely to stay home with their children than male employees.

In fact, in a July 2020 analysis of data from the Census Bureau’s weekly Household Pulse Survey, which encompassed data collected from nearly 89,000 respondents between May 21 and May 26, 2020, the Harvard Joint Center for Housing Studies found that more than half of Hispanic and Black households experienced a decline in employment income since mid-March 2020. This was far higher than the decline of employment income during the peak of the COVID-19 pandemic in white households, of which 39% experienced a decline in employment income.

As schools and businesses reopen, women and minority employees are returning to the workplace. As they do, employers need to be sure to comply with the Diane B. Allen Equal Pay Act, which became effective in July 2018 as an amendment to the New Jersey Law Against Discrimination. The act, which generally applies to all businesses with at least one New Jersey employee, mandates that employers compensate employees within any of the protected categories under the LAD at the same rate as non-protected employees who perform “substantially similar work,” unless a pay differential is justified by legitimate factors, such as training, education or experience, or the quantity or quality of production. Rate of compensation includes base pay and benefits. The act further prohibits employers from considering an employee’s salary history in determining pay.

Failure to comply with the act can result in significant financial implications for employers. The statute of limitations under the act is six years, in comparison to the two-year statute of limitations applicable to other claims under the LAD. In addition, each instance of any wage, benefit or other form of compensation found to be paid in violation of the act may entitle an employee to recover not only compensatory damages, attorneys’ fees and costs, but also treble damages in the amount of three times the amount of the pay differential. For small employers especially, such damages may be crippling.

Moreover, compliance with the act makes for a better, more effective working environment. Equitable workplaces lead to an increase in morale, job satisfaction and productivity, which can improve organizational performance. Employees who feel respected as a result of knowing their employers promote workplace fairness and pay equity are also more likely to remain with a company and less likely to complain of discrimination.

There are a variety of practices and policies employers can implement to best ensure compliance with the act. For example, employers may choose to voluntarily conduct an equal pay audit of their current pay practices to see if they are currently in compliance with the act, to appropriately remedy any potential violations and to mitigate any pay practices that could lead to potential future exposure under the act. Many employers choose to conduct these audits with the guidance of counsel in an effort to best protect the audit findings from disclosure. Employers may also choose to establish salary ranges associated with designated employee career levels, where each position within a career level must be compensated within the associated salary range, rather than be left to arbitrary or discretionary decisions of different managers or decision-makers.

Ultimately, it is vital for employers to comply with the act during the hiring process as well as in making pay and benefit determinations for current employees. Working with trusted employment counsel every step of the way is critical to protecting your organization from conduct that may constitute potential violations of the LAD and other anti-discrimination laws.

Lindsay A. Dischley is a member with Chiesa Shahinian & Giantomasi P.C.’s Employment Group. Nicole C. Tracy is an associate with CSG’s Employment Group.