New Jersey Joins a Growing List of States Requiring Greater Pay Transparency
On November 18, 2024, New Jersey Governor Phil Murphy signed Senate Bill 2310 (S2310) into law requiring employers to provide notice of promotion opportunities to affected employees and disclose certain compensation and benefit information in postings for new job openings and transfer opportunities. The law will go into effect on June 1, 2025. New Jersey joins a growing list of states requiring pay transparency, including California, Colorado, Connecticut, Hawaii, Illinois, Massachusetts, Maryland, Nevada, New York, Rhode Island and Washington.
How Did We Get Here?
A version of the bill (A3937, 2022-2023) was originally introduced in the General Assembly during the legislature’s last session and received bipartisan support in the Assembly Consumer Affairs Committee. After the committee made substantial revisions, the bill ultimately died in the Assembly Appropriations Committee. The Senate companion bill (S3663, 2022-2023) expired in the Senate Labor Committee without a vote.
In the meantime, Jersey City (the state’s second-largest city by population) adopted an ordinance amending its pay transparency regulations on June 15, 2022. Among other things, Ordinance 22-045 requires Jersey City employers and employment agencies with five or more employees, including independent contractors working “in furtherance of the employer’s business,” to include a good faith minimum and maximum salary or hourly wage on postings for employment opportunities, transfers or promotions.
Senate sponsors introduced S2310 on January 25, 2024, tracking many of the revisions made during the previous session. The Senate Labor Committee favorably released the bill with amendments after a bipartisan vote. The committee amendments reduced the civil penalties from $1,000 for a first violation, $5,000 for a second violation and $10,000 for subsequent violations to $300 for a first violation and $600 for subsequent violations. On June 28, 2024, the Senate unanimously passed S2310 as amended.
Assembly sponsors introduced the companion bill (A4151) on April 4, 2024, and the General Assembly ultimately approved the bill on September 26, 2024, (substituting A4151 for S2310) by a vote that largely fell along a partisan divide.
Which Employers Must Comply?
S2310 defines employers as those with “[ten] or more employees over [twenty] weeks” who do business, employ people or take employment applications within New Jersey. The definition also includes job placement and referral agencies, as well as the state, county, and municipal governments and their instrumentalities.
Temporary help service firms and consulting firms are also required to provide applicants for temporary employment salary and benefits disclosures, required by the act at the time of interview or hire for a specific job opening. The disclosure requirements do not apply to efforts by search firms to identify applicants for potential future job openings.
What Are the New Requirements?
The new law requires employers to disclose salary, wage and benefits information in all job postings. Failure to comply could result in civil penalties.
Pay Disclosure
When advertising (internally or externally) for new job openings and transfer opportunities, employers will be required to include in the posting (a) the hourly wage or salary, or a range of either, and (b) a “general description of benefits and other compensation programs for which the employee would be eligible.” An employer is not confined to the posted range, and is not prohibited from increasing “wages, benefits, and compensation” included in the posting when it makes an offer for employment to an applicant.
Promotion Notices
Prior to making a promotion decision, an employer will now be required to make “reasonable efforts” to notify current employees in affected departments of “opportunities for promotion” that are advertised internally or externally. The term “reasonable efforts” is not defined. However, under S2310, promotion means “a change in job title and an increase in compensation.” Methods of advertising include, among other forms, “internet-based advertisements, postings, [and] printed flyers.”
The law makes two exceptions from the obligation to post this notice before making a promotion decision. First, an employer is not required to give notice of a promotion opportunity to a current employee who is “awarded on the basis of years of experience or performance.” Second, an employer may forego the notice requirement for a promotion made on “an emergent basis due to an unforeseen event.” The latter exception is left undefined.
What Are the Penalties?
Although the legislature reduced the civil penalties in its committee amendments, employers still face significant fines for violations of the new notice and disclosure requirements. First-time violators face penalties up to $300, and subsequent violations may carry a penalty of up to $600.
Violations are based on a per-posting basis. For promotion notices, that means an employer’s failure to comply for one promotional opportunity will be considered “one violation for all listings of [that] particular promotion,” even if listed on multiple forums. Likewise, for pay disclosure, an employer’s failure to comply “for all postings for a particular job opening or transfer opportunity” will be considered “one violation regardless of the number of postings that list, or forums that advertise, that job opening or transfer opportunity.”
Importantly, the legislature left out a private right of action. Nevertheless, the New Jersey Department of Labor and Workforce Development has the authority to enforce S2310’s mandates and collect fines in summary proceedings based on the Penalty Enforcement Law of 1999.
What Should Employers Do Now?
New Jersey employers should confirm that accurate hourly wage or salary ranges, as well as other eligible compensation and benefits, are assigned to all job positions prior to the law’s effective date to ensure that applicable postings are accurate and complete. To the extent that companies are already doing nationwide pay disclosure, keep in mind that the New Jersey law is broader than some existing laws in mandating disclosure of all eligible compensation programs (for example, bonus programs), as well as benefits, applicable to the position. Third-party recruiters will also need to be informed in writing of the need to comply with these statutory requirements. Employers should also incorporate a similar disclosure protocol to employees in the relevant departments/divisions when evaluating promotions and transfers that include a compensation increase.
Employers should also consider privileged pay equity audits to understand the key factors influencing compensation, ensure alignment among pay bands, and have a proactive process to promptly and accurately respond to inquires from current employees about where they fall on the applicable pay range in this era of ever-increasing pay transparency.
Faegre Drinker’s pay equity team continues to monitor pay transparency developments on a federal, state, local and international level to provide ongoing counseling and assistance with regards to expanding compliance obligations and litigation risk in this area.
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