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January 19th, 2018

Garden State’s New Governor Faces Bellwether Choice on ‘Pay Equity’ Legislation

New JerseyNew Jersey, already ranked 6th among the nation’s worst Judicial Hellholes, has a newly inaugurated governor who’s wasted no time signaling his intention to expand growth-stifling civil liability still further.

Gov. Phil Murphy has urged state lawmakers to send him a so-called pay-equity bill, and very progressive Senate Majority Leader Loretta Weinberg has gotten the ball rolling by introducing S104 – the same liability-laden bill vetoed by former Gov. Chris Christie in 2016 when it was known as S992.  Christie’s 2016 veto message concluded by proposing several moderating amendments, none of which has been incorporated into S104.

Thus Gov. Murphy now faces a bellwether moment in his nascent administration: Either he’ll support Leader Weinberg’s aggressively anti-business bill and signal to both legislative progressives and the state’s notoriously opportunistic plaintiffs’ bar that he’s their guy, or he’ll thoughtfully, even quietly, ask lawmakers to work with him in crafting a more moderate bill that fosters pay equity without driving businesses to Pennsylvania, Delaware, the Carolinas or elsewhere.

Meanwhile, as currently drafted, S104 is one of the most onerous pay-equity bills ever introduced in a state legislature. Among other things, it would:

Eliminate the statute of limitations and embrace the “continuing violation theory,” placing no limitation on the amount of backpay that an employee may recover in a wage violation case. Current federal and New Jersey law both reset the two-year statute of limitations at each paycheck, thus limiting recovery to the most recent two years of pay;

Eliminate any consideration of whether a given employee’s tasks were in any real sense equal to those of others, and whether s/he faced similar working conditions. Instead, the bill would create a new, easily gamed standard of “substantially similar” work. It also would put the burden of proof on an employer to justify any wage disparity based on any factors other than seniority or merit;

Award treble damages for violations of the bill, which is inconsistent with federal and current New Jersey law for these types of violations;

Require any employer entering into a contract with a public body to disclose to the Commissioner of Labor and Workforce Development the gender, race, job title, occupational category and total compensation of every employee connected to the contract.

But even super-progressive California’s Gov. Jerry Brown last year vetoed legislation that would have similarly required larger employers to file pay and gender data with the state, all of which would have then become accessible to plaintiffs’ lawyers via Freedom of Information Act filings.  Brown’s veto message cited the bill’s ambiguities and said he “worried that this ambiguity could be exploited to encourage more litigation than pay equity.”  (ATRA voiced similar concerns in a 2009 debate about the subsequently defeated federal Paycheck Fairness Act then pending in Congress.)

If Gov. Murphy has any comparable worries about what still more civil liability and litigation — coupled with some of the highest taxes in the nation — may do to his state’s economy and revenues as businesses consider following some of the millionaires and billionaires already fleeing to lower-cost jurisdictions, he hasn’t articulated them publicly.

In any case, if the governor continues pandering to anti-business politicians and trial lawyers, New Jersey will almost surely go the way of all-but-insolvent Connecticut.  So perhaps he might consider working more inclusively and constructively with the business community to stabilize his state’s precarious fiscal condition.

After all, Garden State sources tell ATRA  that the business community there is prepared to live with reasonable pay-equity measures, such as outlawing employers’ questioning of job applicants about their salary histories.  Gov. Murphy’s first executive order earlier this week ended such questioning of applicants for state government jobs.  But the burdens that radical legislative leaders wish to impose on private-sector employers are much more onerous and will do far more for trial lawyers’ bank accounts than they’ll do for those seeking jobs and career opportunities in New Jersey.

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