New Jersey State Court Addresses Scope of NJEPA

Quick Hits

• The New Jersey Diane B. Allen Equal Pay Act (NJEPA)—an amendment to the New Jersey Law Against Discrimination (NJLAD)—does not apply retroactively prior to its effective date of July 1, 2018. This is the first New Jersey state court case to hold as such.
• However, NJEPA’s six-year lookback period for pay discrimination claims does not eliminate the prior two-year lookback period under the NJLAD for claims arising after the July 1, 2018, effective date.
• Plaintiffs advancing claims under the NJEPA can potentially obtain comparator employee compensation data in discovery—critical evidence in any pay equity claim – from all of an employer’s operations and facilities, including nationwide data when applicable, and not just from an employer’s New Jersey office.

Background

In Affrunti v. Reed Smith, LLP, the plaintiff, Sherri Affrunti, was employed by Reed Smith as a non-equity partner from January 1, 2006, through January 11, 2019. After she resigned from the firm, she filed suit against the firm, alleging, among other claims, that she had been paid less than her male counterparts because of her gender, in violation of the NJEPA. Reed Smith then filed a motion seeking to limit her damages and the discovery of comparator employee compensation information to (1) the time period of July 1, 2018 (the effective date of the NJEPA) through her departure from the firm in January 2019, and (2) only those non-equity partners located in Reed Smith’s New Jersey office.

The trial court granted Reed Smith’s motion, finding that because the NJEPA does not apply retroactively, “it follows that alleged damages should comport with the same temporal limitation”—i.e., July 1, 2018, through the date of her resignation. Additionally, the trial court entered an order prohibiting her from seeking discovery of comparator pay data nationwide and limiting such discovery to Reed Smith’s New Jersey-based non-equity partners. The plaintiff-(former) employee then appealed each of these rulings.

Temporal Scope of the Plaintiff’s Unequal Pay Damages

On appeal, the Appellate Division first considered whether the plaintiff was entitled to seek damages for the entire period she worked at Reed Smith as a non-equity partner—again, January 1, 2006, through January 11, 2019. Relying on established New Jersey Supreme Court precedent, the Appellate Division agreed with the trial court’s conclusion that the NJEPA does not apply retroactively, but it disagreed with how the trial court prospectively applied the NJEPA to the plaintiff’s alleged unequal pay damages. Specifically, the Appellate Division found that, because a two-year lookback period already existed under the NJLAD before the NJEPA took effect, the unequal pay damages alleged should not be limited to the effective date of the NJEPA. Accordingly, plaintiff was allowed to pursue back pay damages for the two-year period predating the filing of her complaint on December 18, 2020, only.

Temporal Scope of Comparator Pay Discovery

The Appellate Division then considered the issue of whether the plaintiff was entitled to discovery of comparator employee compensation for the time period July 1, 2018, through January 11, 2019, only. Relying on the NJEPA’s text, legislative history, and relevant agency interpretations, the appellate panel concluded that the plaintiff was entitled to such discovery for the entire period she was employed as a non-equity partner, and not just the period following the NJEPA’s effective date of July 1, 2018. Importantly, however, the Appellate Division expressly noted that the admissibility of such discovery was “not before us,” thus leaving open the question of whether materials regarding pay after the NJEPA’s July 1, 2018, effective date could be used by the plaintiff at trial.

Geographic Scope of Comparator Pay Discovery

Finally, the Appellate Division addressed the plaintiff’s contention that the trial court had erred in barring her from seeking discovery of comparator pay data throughout all of Reed Smith’s United States locations. Relying primarily on guidance issued by the New Jersey Division on Civil Rights, the Appellate Division found that the plaintiff was permitted to seek comparator pay discovery throughout the entire United States, and not just that limited to Reed Smith’s New Jersey office location, concluding that “[a]s an employer within the definition of the [NJ]LAD, Reed Smith is subject to the [NJEPA’s] provision requiring that the ‘comparison of wage rates … be based on wage rates in all of an employer’s operations or facilities.’”

Key Takeaways

Employers of all sizes can view Affrunti as a cautionary tale and strategic inflection point. With expansive discovery rules and evolving statutory horizons for damages available to pay equity plaintiffs, employers may want to consider auditing their pay practices on a regular and proactive basis. Pay equity reviews and audits can make or break defenses in pay discrimination disputes, and businesses concerned about pay equity compliance, compensation practices, and how to respond strategically to pay discrimination claims or discovery requests may want to consider undertaking such an analysis.

Ogletree Deakins’ Morristown office will continue to monitor developments and will provide updates on the New Jersey and Pay Equity blogs as additional information becomes available.

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