New Jersey employers are now required to share more information about how much their workers are paid, but some observers think the additional information could bring an uptick in complaints from those who consider their pay unfair.
The New Jersey Pay and Benefits Transparency Law, which went into effect June 1, requires employers with 10 or more employees, who are posting job openings, to disclose the hourly wage or salary of the position, or a range; a general description of benefits; and details on any other compensation that applies to the position. It also mandates that employers must post promotion opportunities for access by existing employees. The law covers job postings in many formats, including job search websites, print advertisements, company newsletters, emails and social media.
Compliance to the law is up to the state Department of Labor, and it does not provide a private cause of action.
The law is designed to augment the Diane B. Allen Equal Pay Act of 2018, which prohibits employers from paying a worker less based on a protected characteristic. That law, which allows workers to file suits to recover back pay and treble damages, was named for a television anchor who won an equal-pay suit.
“Requiring salary and benefit transparency, as well as promotional notifications, fosters an environment of trust and fairness that benefits both employers and employees. This law empowers workers to make informed decisions and encourages employers to compete fairly, driving progress in our labor market,” said New Jersey Labor Commissioner Robert Asaro-Angelo in an announcement when the law went into effect.
Employers who fail to comply will face a civil penalty of $300 for the first violation and $600 for subsequent violations. Enforcement is up to the Department of Labor, and the law does not provide a private cause of action.
Some employment lawyers predict an uptick in inquiries from existing employees who, after seeing the salary data posted under the new law, contact HR to ask why their current pay is less than what others are getting.
Law firm clients who have taken a look a the new law are concerned about its impact on employee relations, said Jay Sabin, a defense-side labor and employment lawyer at Brach Eichler in Roseland, New Jersey.
“There could be some employees who look at a posting for a job that appears to be what they are doing, and their reaction is, ‘I’m not making that much. Why is this job being posted for a salary range of X to Y, and I’m below the lower end of that range?'” Sabin said.
Asked whether that scenario is likely to lead to litigation, he said “disgruntlement in the workplace often leads to litigation.”
But Kevin Costello, of Costello, Mains & Silverman in Mount Laurel, a plaintiff-side employment firm, said he was unwilling to predict the new law would generate more wage equity litigation. Noting that he was speaking “with good humor and nothing but respect for his defense colleagues,” he said that “defense lawyers always say that whenever there’s a new law in the books that provides or confirms rights, there is a hue and cry that this is going to increase litigation. And whether it does or doesn’t, doesn’t mean that the law isn’t a good idea.”
With similar wage transparency laws in effect around the country, there’s probably data about whether making wage information public results in more grievances or lawsuits involving existing employees, said Alexandra Barnett, a labor and employment lawyer at Alston & Bird in New York.
“I think one thing that employers could do to combat that situation is perhaps taking a pay equity audit first to look at how much they’re paying their current employees, to make sure that the ranges that they are posting for new opportunities or transfer opportunities or promotions are in line with what people are earning in currently in the company, and to if there are outliers who are making less, maybe those people need to be bumped up,” Barnett said
“I think it’s important for employers to know where they stand with respect to pay equity and the ranges that employees are currently making before they begin advertising what new ranges are going to be, because that way, if they’re familiar with where things are currently, they’ll be less to make the mistake of promoting a salary or benefits that are not in line with existing employees,” Barnett said.
The new law doesn’t prevent employers from hiring an employee at a salary higher than the range it posts in its job advertisement, Barnett said.
A notable aspect of the new law is its extensive reach—it apples to any company with 10 or more employees for 20 weeks of the year, anywhere in the United States that does business, has employees or takes applications for employment in New Jersey.
Costello said the law makes it easier “for employees to prevent discrimination. It is easier for employers to avoid allegations of discrimination when there is transparency. That’s it,” he said, citing GI Joe’s motto, “knowing is half the battle.”
“The Diane Allen law provides a cause of action for somebody who feels and can prove that their compensation is discriminatory, is less than a similarly situated worker doing substantially the same work, where the basis for the disparity might be a discriminatory criteria like age, sex or gender,” Costello said.
“Okay, simple enough, and it provides a remedy for the aggrieved worker,” Costello added. “This law is not about providing remedies for an aggrieved worker. It is about making sure that employers display and advise their workers, potential and present, of what the compensation is going to be for a given job or position, promotion, whatever, and that when the person or a person is applying for that, that the job gives them that data transparently.”