Today’s post comes to us courtesy of Asad Rizvi, a Labor and Employment associate in our Roseland office:

17813952_sGarden State employers are breathing a sigh of relief.  On Monday, May 2nd, Governor Christie conditionally vetoed a New Jersey pay equity bill that would have presented one of the most dramatic changes to the New Jersey Law Against Discrimination (“LAD”).  Senate Bill No. 992, which passed both houses of the State legislature earlier this year, sought to impose considerably greater liability on employers by surpassing the existing rules governing pay equity.  The veto struck out several of the distinguishing features of the proposed legislation that, in the Governor’s words, would make New Jersey a “liberal outlier.”

For one, the Governor rejected the proposal to adopt an unlimited statute of limitations that would lift the two-year cap on the recovery of back pay by employees subjected to sex discrimination in compensation or the financial terms or conditions of their employment.  Second, the Governor found that employers, in accordance with the law, should not be prohibited from compelling employees to consent to a shorter limitations period on claims under LAD as a condition of employment.  This prohibition, the Governor found “unduly constrains an employer and employee’s ability to negotiate the terms of employment.”

The Governor also rejected the legal standard proposed under Senate Bill No. 992, which prevents employers from engaging in an individualized “intensive fact-based evaluation” to defendant against pay equity claims.  The treble damages provision of the bill was also vetoed, as the Governor found it inconsistent with existing remedies under state and federal law which exclusively provide for back pay.  Finally, as he did in a prior legislative session,  the Governor found the new demographic reporting requirements imposed by the bill on State contractors to be unnecessary and disruptive to the State economy, calling it a “burdensome reporting mandate upon the businesses of this state.”

While employers may have won the battle for now, the war over pay equity is not over.  At the moment, the administration and legislature appear far apart in their negotiations over the bill.  However, State legislators have promised to keep pressing onward for the passage of this dramatic piece of employment legislation, which the Governor finds and employers would agree is “very business unfriendly.”  While the fight continues on in Trenton, employers seeking to review their pay practices should contact employment counsel.  Meanwhile, we will keep our eyes on Senate Bill No. 992.