The recently enacted Diane B. Allen Equal Pay Act in New Jersey has been ruled not to be retroactive by a federal court, but the ruling leaves open the possibility that state courts may decide differently.

The ruling came at the closing of a case involving Darla Perrotto and her former employer, Morgan Advanced Materials and Morgan Advanced Ceramics, Inc., in the United States District Court for the District of New Jersey.

Plaintiff Perrotto was terminated from the company on April 5, 2018, roughly 3 weeks before what is more commonly known as the New Jersey Equal Pay Act (NJ EPA) was signed into law and three months before it went into effect in July 2018. Perrotto sued her employer for gender discrimination and retaliatory compensation practices under the NJ EPA. Perotto contended that Morgan Advanced Materials paid a rate of compensation, including benefits, to male employees that were more than the rate paid to female employees for substantially similar work. She also alleged that the company retaliated against her for engaging in activities protected by the NJ EPA.

In its ruling, the court found application of the NJ EPA was prospective and not retroactive. This ruling, however, is only applicable to federal court cases. A New Jersey state court could read the statute differently and hold that the NJ EPA is retroactive.

The NJ EPA applies to all New Jersey employers, regardless of size. The purpose of the law is to strengthen protections against employment discrimination and promote equal pay for all groups afforded protection against discrimination under the New Jersey Law Against Discrimination.

The law, among other things, prohibits paying a lesser rate of compensation — including benefits — to a member of any protected class in New Jersey and extends the statute of limitations for compensation claims.

Organizations with operations in the state of New Jersey should familiarize themselves with the requirements of the NJ EPA to ensure they are not subject to legal action and negative PR.

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