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Gender Pay Equality in New Jersey Lags Behind New York

Gender Pay Equality in New Jersey Lags Behind New York

by: Pedro Blanco

Nearly eight years after President Obama signed the Lilly Ledbetter Pay Fair Act, women in America are still earning 78 cents for every dollar their male colleagues make.[1] Minority women, particularly African American and Hispanic women, nationally experience the largest pay disparities. As of 2014, African American women were paid almost 40% less than white, non-Hispanic, men and approximately 20% less than white, non-Hispanic women.[2]  Hispanic women were paid approximately 44% less than white, non-Hispanic men and 27% less than white, non-Hispanic women.[3] Women in New York however, do much better than the national average and earn 89 cents for every dollar their male counterparts make. Women in New Jersey, while still beating the national average, earn 82 cents for every dollar their male colleagues make. Thus, while New York has managed to bring the gender wage gap down to about 11%, in New Jersey, the gender wage gap stands at about 18%.[4]

In fact, a recent report by the Institute for Women’s Policy Research suggests that New Jersey will not see gender pay equity until the year 2055. New York on the other hand, is likely to see pay equity by 2049.[5] While a six-year time difference in reaching pay equity between the states is seemingly inconsequential, it nevertheless amounts to significant earning disparities between women in New York and New Jersey. Indeed, because New York is currently ahead of New Jersey in closing the pay gap by about 7%, and New York stands to reach pay equity six years before New Jersey, women working in New York are already much closer to reaching pay equity than are women working in New Jersey.

Why is New Jersey lagging behind New York when it comes to gender pay equity? While many different factors contribute to gender pay inequality in New York and New Jersey, the difference in pay transparency laws between the two states provides some insight.

 What is Pay Transparency and Why does it Matter

Pay transparency is the concept of allowing employees to discuss their compensation and benefits without fearing any retaliation from their employer. Today, factors impacting the pay gap between American men and women include educational differences, such as choice of major in college, levels of educational attainment and choice of industry.[6]  A pay gap that results from discrimination however, is almost certain to exist where pay secrecy, a prohibition on allowing employees to openly discuss compensation, is in effect. This is because it is difficult, if not impossible, for women to become aware of pay inequities when they are unable to discuss compensation in the workplace.[7] Where compensation can be discussed openly, women are more likely to discover that they are being discriminated against, allowing them to successfully bring claims of pay discrimination under existing pay equity laws. Finally, beyond putting women on notice of pay inequities in the workplace, pay transparency also plays a crucial role in helping women to advance their careers and close the gender pay gap. Recent studies have shown that having knowledge of compensation associated with prospective job opportunities helps eliminate prospective job uncertainty.  Once prospective job uncertainty is eliminated, women who would otherwise be “risk adverse” to take on the risks associated with new jobs, are more likely to accept new job opportunities and negotiate starting salaries. Because of this, pay transparency plays a crucial role in eliminating the gender pay gap.[8]

Pay Transparency on the Federal Level:

The federal government sets the floor on pay transparency on a national level. Section 7 of the National Labor Relations Act (NLRA) protects certain employees from employer retaliation when discussing compensation.[9] As recently as 2015, a judge at the National Labor Relations Board found T-Mobile guilty of NLRA violations for having polices that prohibited its workers from discussing compensation.[10] The NLRA however, only covers certain employees and does not cover supervisors and managers. Despite these federal protections, at the national level, about half of all workers “report that the discussion of wage and salary information is either discouraged or prohibited and/or could lead to punishment.”[11]  Moreover, it is common that where an employer has no written policy prohibiting retaliation for discussing compensation, the accompanying business culture is to avoid discussing compensation.[12]

Women working for federal contractors also enjoy the additional protection of Executive Order 13665, Non-Retaliation for Disclosure of Compensation Information, which prohibits federal contractors from discharging or discriminating in any way against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant.[13] Recent regulations issued by the Office of Federal Contract Compliance Programs’ require federal contractors to update manuals, policies, handbooks, intranet pages, home pages, and applicant tracking landing pages by inserting the new nondiscriminatory language in its entirety.[14] While the federal law currently protects employees from retaliation by employers for discussing compensation, and employees of federal contractors enjoy added protections, current federal legislation does not require private employers to put employees on notice of the prohibition on pay secrecy, and it does not require reporting of gender pay differences to any government authority. Lacking notice of this prohibition, employees often assume that discussing compensation is prohibited.

To remedy these gaps in federal law, Congress sought to pass the Paycheck Fairness Act (“PFA”). Although PFA ultimately failed to pass, it would have amended the Equal Pay Act of 1963, to limit when employers are allowed to compensate differently based upon “bona fide factors, such as education, training, or experience” and would have required the Equal Employment Opportunity Commission (EEOC) to collect data on compensation, hiring, termination, and promotion sorted by sex.[15] These proposed reporting requirements may have had significant impact in achieving pay transparency nationally. Moreover, it is likely that enhanced employer reporting requirements would have encouraged voluntary action towards reducing gender pay disparities by companies wishing to avoid being “shamed” for their large pay gaps

Despite the PFA’s failure, in January 2016, the Department of Labor (“DOL”) announced new reporting requirements that will begin in 2017. The DOL will require businesses with 100 or more employees (both private industry and Federal contractors) to submit data, on among other items, compensation by gender and race.[16] Even when these new DOL reporting requirements go into effect, employers with less than 100 employees will not have to report the data. Absent a renewed effort by congress to pass the PFA, state legislation will have to fill in the gap on pay transparency. Because of Congressional failure to pass the PFA, and the resulting pay transparency gaps, over half the states, including New York and New Jersey, have taken their own measures in enacting pay transparency legislation.[17] While New York did succeed in passing pay transparency legislation, New Jersey has, as of this writing, ultimately failed to do so.

Pay Transparency in New York and New Jersey

While both New York and New Jersey prohibit employers from retaliating against employees who raise compensation concerns,[18] New York went a few steps further in 2015 by amending its Equal Pay Act. New York’s Equal Pay Act amendments, which took effect in January 2016, make pursuing a claim of pay discrimination on the basis of sex easier for employees in a number of ways. First, the amendments limit affirmative defenses New York employers can raise in pay discrimination actions. Previously employers in New York could avoid liability by showing that the pay disparity was the result of a “factor other than sex,” the amendment now requires that an employer show that the disparity is “job related.”[19] Furthermore, the amendments now allow an aggrieved employee to recover treble damages for violations of equal pay laws.[20] New York law, much like New Jersey law, does not require employers to report data on gender pay disparities. While it may be too soon to tell how effective New York’s equal pay act amendments will be in closing the gender pay gap.  The amendments do show promise in in encouraging New York employers to voluntarily monitor and correct any legally unjustifiable gender pay disparities under the amended law, or risk increased liability.

To their credit, New Jersey legislators recently sought to increase protections for women pursing pay discrimination claims, and even went a step further by seeking to require some employers to report data on compensation including gender and race. On May 2, 2016, New Jersey Governor Christopher James “Chris” Christie conditionally vetoed Senate Bill No. 992 (“ Bill S992”) “an Act concerning equal pay for women and employment discrimination, requiring public contractors to report certain employment information.”  Bill S992 would have allowed an employee pursuing a pay discrimination claim to recover unlimited back pay, and like the New York law, would have also allowed plaintiffs to recover treble damages for violations of equal pay laws. The bill went further than New York by also seeking to require business contracting with the state to report compensation data that included gender and race information. If the law is eventually enacted, it will likely contribute towards eliminating the gender pay gap.

Conclusion

While New York appears to have moved the needle towards pay equity further than New Jersey, it is still far from achieving pay equity. Beyond making it easier for employees to purse pay discrimination claims, as New York recently has, improving pay transparency also requires mandatory reporting of compensation data such as gender and race information. While new DOL efforts in this arena do make significant progress to this cause, they fall short of all that is necessary to ensure equal pay for all women. Gender pay equity in both New York and New Jersey could be a reality sooner than the currently projected 30 years, by requiring employers to report employee compensation data that includes gender and race. This would effectively encourage voluntary compliance with current pay equity laws as businesses would have to account for any legally unjustifiable gender pay disparities when reporting data to the state. Finally, with the new DOL reporting requirements likely taking effect in the near future, businesses employing 100 employees or more would be wise to review their current employee compensation structure and correct any gender pay disparities that cannot be justified under current equal pay laws.

[1]  The Status of Women in the States: 2015 — Employment and Earnings, Inst. for Women’s Policy Research (Mar. 2015), http://www.iwpr.org/publications/pubs/the-status-of-women-in-the-states-2015-2014-employment-and-earnings.

[2] Joan Farrelly-Harrigan, Women’s Bureau, Black Women in the Labor Force, U.S. Dep’t. of Labor, (Feb. 2016), https://www.dol.gov/wb/media/Black_Women_in_the_Labor_Force.pdf.

[3] Michelle Vaca, Celebrating Hispanic Women in the Labor Force U.S. Dep’t. of Labor Blog (Oct. 6, 2015), http://blog.dol.gov/2015/10/06/celebrating-hispanic-women-in-the-labor-force.

[4]Wage Gap State Rankings: 2015, The Nat’l Women’s Law Center (Sept. 2016),  https://nwlc.org/wp-content/uploads/2015/09/Wage-Gap-State-By-State.pdf)

[5] Supra, note 1.

[6] The Gender Pay Gap On The Anniversary Of The Lilly Ledbetter Fair Pay Act, Council Of Econ. Advisers Issue Brief (Jan. 2016), https://www.dol.gov/wb/resources/gender_pay_gap_issue_brief.pdf

 

[7] Id. at 5. See also, Olga Fetisova, Effects of Anti-Secrecy Pay Laws on the Gender Wage Gap (May 2014), http://econserver.umd.edu/~edinger/undergraduate/Fetisova_Honors_Thesis2014.pdf.

[8] Chamberlain, Andre, Is Salary Transparency More than a Trend, Glassdoor(Apr. 2015), https://www.dol.gov/wb/resources/gender_pay_gap_issue_brief.pdf.

[9] 29 U.S.C. § 157

[10] Judge Finds T-Mobile Guilty of Maintaining Illegal Corporate Policies Against Workers Across the US, Communications Workers of America, CWA (Mar. 19, 2015),  http://www.cwa-union.org/news/entry/judge_finds_t-mobile_us_guilty_of_illegal_corporate_policies#.VQwFlbN4r-Y.

[11]Pay Secrecy and Wage Discrimination, Inst. For Women’s Policy Research (Jan. 2014),  http://www.iwpr.org/publications/pubs/pay-secrecy-and-wage-discrimination.

[12] See generally Leonard Bierman and Rafael Gely, Love, Sex and Politics—Sure—Salary—No Way: Workplace Social Norms and the Law, 25 Berkeley J. of Empl. & Labor L. 167 (2004).

[13] Executive Order 13665—Non-Retaliation for Disclosure of Compensation

Information, April 8, 2014.

[14] 41 CFR 60-1.35(c)

[15] S. 862, Paycheck Fairness Act, https://www.govtrack.us/congress/bills/114/s862/summary)

[16] 81 FR 5113

[17]  Rosemarie Lally, Proposed State Laws Address Pay Secrecy: Women’s legal groups push for salary transparency between genders, Soc’y for Human Resource Management (Feb. 23, 2016), (https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/proposed-state-laws-address-pay-secrecy.aspx)

[18] N.J.S.A. 10:5-12(r); N.Y. Lab. Law § 194 (4)(a).

[19] N.Y. Lab. L. §194(1)(d).

[20] Id.