Big Changes for New Jersey Employers

Following the lead of a number of other states and cities across the country, New Jersey is taking steps to implement two new laws that will have a significant impact on employers.

Pay Equity

The first law, which has already been signed by the governor, involves pay equity.  The new law bars New Jersey employers from paying employees in a protected class a rate of compensation (including benefits) that is less than the rate paid to other employees who are not in a protected class for substantially similar work considering skill, effort, and responsibility.  The new law goes into effect on July 1, 2018.

An exception to the law is available only if an employer can show all of the following:

·         The compensation differential is based on a legitimate factor or factors other than protected class, such as education, training, experience, or the quantity or quality of production;

·         The legitimate factor or factors aren’t based on or don’t perpetuate a difference in compensation based on protected class;

·         The legitimate factor(s) are applied reasonably;

·         The legitimate factor(s) account for the full compensation differential; and

·         The legitimate factor(s) relating to the position are based on business necessity.

The text of the law can be found here:

Penalties for non-compliance include back pay of up to six years, and triple damages against employers for discrimination and retaliation.  New Jersey employers should begin analyzing their compensation policies ahead of the new law taking effect.

Paid Sick Leave

The second law will provide paid sick leave to New Jersey employees.  The law has been passed by both houses of the state legislature, and the governor has indicated he will sign the bill on May 2, 2018.  The law is expected to go into effect on October 29, 2018. 

The law will apply to all private and public sector employees, except for those with a current collective bargaining agreement (CBA).  The law will apply to those current CBA employees once their active CBA expires.

Employees will accrue one hour of paid sick time for every 30 hours worked.  Employers with less than 10 employees would be required to allow accrual and carryover of up to 40 hours of paid sick leave per year.  Employers with 10 or more employees would be required to allow accrual and carryover of up to 72 hours per year. 

Paid sick time becomes available to use no later than the 90th day of employment.  Employees can take the time over a 12-month “benefit year” set by the employer. 

Employees can use paid sick leave for:

·         Diagnosis, care, treatment, or recovery from the employee’s or employee’s family member’s physical or mental illness, injury, or adverse health condition, or preventative care 

·         Circumstances surrounding the employee or family member being a victim of domestic or sexual violence, including medical attention, counseling, relocation, or legal or other services

“Family member” includes child, grandchild, sibling, spouse, civil union partner, domestic partner, parent, or grandparent of an employee, or a spouse, civil union partner, domestic partner, or a parent or grandparent of the employee, or a sibling of a spouse, civil union partner, or domestic partner of the employee.

Employers should begin preparing for implementation of paid sick time.  Employers will be able to continue to use their existing paid time off policies if the policies provide for at least as much paid time off as the new paid sick leave law, and allow for the same or more reasons for leave.