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New Jersey Legislative Update: Equal Pay and Paid Sick Leave

New Jersey Governor Phil Murphy recently signed into law a bill that provides equal pay protections for members of certain protected classes. Governor Murphy also signed into law a bill that requires New Jersey employers to provide paid sick leave to employees.

A summary of both laws is provided below:

Equal Pay Act

The Diane B. Allen Equal Pay Act, which takes effect July 1, 2018, prohibits employers from paying members of a protected class at a rate of compensation (including benefits) that is less than others who perform “substantially similar work”.  Under the law, protected classes are determined based on 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 or expression, or disability.  Comparisons of wage rates will be based on the wage rates in all of the employer’s operations or facilities.

An employer may pay a different rate of compensation only if the employer demonstrates that the difference is due to a seniority system, a merit system or based on legitimate, bona-fide factors that: (a) are not based on or perpetuate differences based on protected characteristics; (b) are applied reasonably; (c) account for the entire wage differential; and (d) are job-related with respect to the position and based on legitimate business necessity.

To prepare for this law, employers should review their current compensation structures, with a specific focus on how and why they calculate differences in pay for certain positions.

Paid Sick Leave Law

Governor Murphy signed into law a bill that requires employers to provide earned sick leave to New Jersey employees, joining an increasing trend across the United States.  Under the law, employees will accrue 1 hour of sick leave for every 30 hours worked, up to 40 hours per year.  The law will apply to all employers except for certain public employers.

The paid leave can be used for: (a) physical and mental illness or condition; (b) aid or care for a family member for such family member’s mental or physical illness or condition; (c) absences due to circumstances of employee or a family member being a victim of domestic or sexual violence; (d) care of a child due to closure of child’s school; and (e) attendance at a school-related conference or other event requested or required by the child’s school.

Employers will be prohibited from retaliating or otherwise discriminating against employees for using paid sick leave.

The act will take effect October 29, 2018.

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Alexander K. Song is a Mintz Associate whose practice focuses on all aspects of executive compensation, including drafting of equity and incentive compensation plans and award agreements. Alex also handles employment, change-in-control, and severance arrangements for executive officers.