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District Court of New Jersey Holds the Equal Pay Act is Not Retroactive

In a slip copy opinion authored by Judge William J. Martini, U.S.D.J., the United States District Court for the District of New Jersey held that the recently enacted New Jersey Equal Pay Act (NJEPA) does not have retroactive application. Perrotto v. Morgan Advanced Materials, PLC, 2019 WL 192903 (Jan. 15, 2019). The issue came before the court by a Motion to Dismiss, filed by Defendants. The court granted the Defendants' Motion to Dismiss without holding oral argument. This holding is important to employers as the potential damages for violation of the Equal Pay Act are the salary or wages due from the employer plus an additional equal amount as liquidated damages, as well as attorney's fees.

Plaintiff had the title Controller/Human Resources until her termination on April 5, 2018. Just three weeks later, the Diane B. Allen Equal Pay Act (codified at N.J.S.A. ยง34:11-56:13) was signed into law, which requires "pay equality across all protected classes." The Act became effective on July 1, 2018. Plaintiff filed this action on July 27, 2018, alleging gender discrimination under New Jersey's Law Against Discrimination and retaliatory compensation practices under the NJEPA. Her compensation claim alleged Defendants paid male employees more than female employees, for substantially similar work.

In granting Defendants' Motion to Dismiss these Counts, the court found that the NJEPA is not retroactive, meaning it does not apply to conduct which occurred before its effective date. Applying the "settled rules of statutory construction" discussed in James v. N.J. Mfrs. Ins. Co., 83 A.3d 70,77 (N.J. 2014), first the court reasoned the Legislature had not explicitly or implicitly intended the Equal Pay Act to apply retroactively. That the Legislature delayed the enactment until July 1, 2018 demonstrates its intention for only prospective application of the statute. Next, the court explained, that the NJEPA did not serve to remedy a prior imperfection or misapplication of a statute. A "first of its kind" statute, retroactive application would not be curative. Finally, the court concluded neither parties' expectations would be served by retroactive application. Plaintiff argued that a pending bill in the Legislature establishes a reasonable expectation of retroactivity. The court disagreed, finding that argument inapplicable to the case.

In concluding, the court added that leave to amend would have been futile because there was no support for retroactive application of the NJEPA. While this decision provides a meaningful limitation on actions brought under the NJEPA, it also provides a reminder to employers to audit salaries across the gender lines, for similar type work, as more suits under the NJEPA are inevitable.

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