New Jersey Law Journal: What You Need to Know About NJ’s New Pay Transparency Act

In an ever-evolving landscape, employers are tasked with balancing transparency and equity laws with internal business decisions and discretion with respect to employee compensation.

To that end, New Jersey has recently become one of a handful of states to adopt new pay transparency requirements. On Nov. 18, 2024, Gov. Phil Murphy signed into law the Pay Transparency Act—a new mandate requiring transparency in employment listings that will take effect on June 1, 2025.

The act (Senate Bill No. 2310) requires employers to include in job postings a range of salary or wages along with a description of the benefits that applicants can expect to receive within the first 12 months of employment. The act applies to job postings for both promotional opportunities and new employment listings.

Employers should be mindful of the act’s new requirements and, more importantly, the effect that new transparency requirements might have on cases filed under New Jersey’s Law Against Discrimination or Diane B. Allen Equal Pay Act.

Key Definitions

The act broadly defines an “employer” as any person, company, corporation, firm, labor organization, or association with 10 or more employees over 20 calendar weeks that also meets one of the following requirements:

Does business in New Jersey;
Employs individuals within New Jersey; or
Takes applications for employment within New Jersey.

Notably, the act does not specify that the 10 employees must work in New Jersey for the act to apply—meaning that the posting requirements are arguably triggered by any employer, including those out-of-state, that does business in New Jersey, employs anyone in New Jersey, or takes applications in New Jersey and has 10 or more employees throughout the requisite time frame.

Job placement agencies, referral agencies, and other employment agencies are included within the definition of “employer” provided that they meet the above conditions.

The act defines “promotion” as any change in job title coupled with an increase in compensation.

Pay Transparency Requirements

The act imposes two distinct sets of obligations on covered New Jersey employers.

First, the act requires pay transparency in postings for promotions, new jobs and transfer opportunities. Specifically, the employer must disclose the hourly wage or salary, or a range of the hourly wage or salary. The employer must also disclose a list of the benefits that the prospective employee can anticipate receiving during the first 12 months of employment. Importantly, the act considers violations of the act in terms of the job opportunity, not by the number of postings. In simpler terms, if an employer posts a single opportunity for employment or promotion in violation of the act multiple times or across multiple platforms, only one violation is assessed against the employer.

Second, the act requires employers to make reasonable efforts to announce, post, or otherwise make known any postings or advertisements for promotional opportunities to all current employees in the affected department(s) prior to making a promotion decision. All postings relating to one particular promotional opportunity are considered one violation of the act, irrespective of the number of postings. The act carves out an exception so as not to prohibit employers from making promotions on an “emergent basis” due to an “unforeseen event.” However, neither of these terms are explicitly defined by the Legislature. Additionally, promotions for current employees based upon years of performance, experience, or service are also exempt from the notice requirements of the act.

The act also allows employers to retain the ability to increase the salary, benefits, or other aspects of a prospective employee’s compensation package when extending an offer of employment.

Penalties for Violations or Noncompliance

Failure to comply with pay transparency requirements will result in a summary proceeding before the Commissioner of the Department of Labor and Workforce Development. Employers who are found to be in violation of the act will be subject to a civil penalty in the amount of $300 for first-time violations and up to $600 for subsequent violations. Notably, the act does not create the ability to a bring civil suit against employers for violations.

Temporary help service and consulting firms registered with the Division of Consumer Affairs in the Department of Law and Public Safety are exempt from the disclosure requirements for any job posting aimed at identifying qualified applicants for potential future job openings. Postings for existing job openings do not fall within this narrow exception.

Roadmap for Covered New Jersey Employers

Passage of the act requires that employers walk the fine line between statutory compliance and business discretion. Armed with a better understanding of how the new pay transparency laws will work in theory, employers can take the following practical steps to ensure compliance with the new law whilst still maintaining the ability to make informed business decisions with respect to salary:

Prepare for June 1, 2025. Ensure that all roles have identified pay ranges that are well-documented in anticipation of meeting disclosure requirements. Employers should similarly review and revise any existing job postings that could potentially run afoul of new transparency requirements, especially with respect to notification of internal promotional opportunities.
Internal Notification of Promotional Opportunities. Employers should consider creation of internal processes that ensure promotions or transfer opportunities are advertised internally to current employees in affected department(s) prior to making a promotional decision. Employers might also consider creating internal processes or teams tasked with analysis of current or new roles, requirements of each role, and pay scales for each role.
Potential Pay Equity Audit of the Business. Consider the wider scope of New Jersey’s pay protections, including New Jersey’s Law Against Discrimination (“LAD”) and Diane B. Allen Equal Pay Act (“Equal Pay Act”), under which employers are prohibited from paying employees of a protected class (race, sex, gender, creed, color, national origin, age, sexual orientation, pregnancy, and disability) wages less than those wages paid to employees who are not members of a protected class based on their protected status for the same or similar work. While the Pay Transparency Act does not allow for a private right of action, employees can file claims under the LAD or Equal Pay Act. Pay equity audits aimed at ensuring compliance with all applicable state and federal law, including new transparency requirements, is a great way to identify any potential issues with existing and future job postings—especially because successful claims under New Jersey’s Equal Pay Act are subject to treble damages under a six-year statute of limitations.
Multistate Businesses. Consider whether your business might already be subject to pay equity and/or transparency laws in other states, depending upon whether the employer has employees in other states or advertises employment opportunities in other states.
Prepare for Emergencies/Unforeseen Circumstances. While the act carves out an exception for employers making promotional decisions on an emergent basis or due to unforeseen events, it is important to be mindful of the gray area that exists because these terms are undefined.
Training In-House and Beyond. Provide training to human resources and recruitment staff, and query whether third-party or contracted organizations that perform these functions have a process in place to train staff with respect to pay transparency. Ensure that those in charge of listing, recruiting, and/or interviewing prospective candidates are well-versed on the additional requirements set forth in the act. Increasing the number of individuals who can identify a potential issue with respect to a job posting or promotional opportunity has no downside.
Retain and Consult Employment Counsel. At first blush, sanctions under the act do not give much cause for concern, but employers should be mindful of the implications that pay transparency requirements will have on viable claims by current employees under the LAD or the Equal Pay Act. Should a current employee learn (by way of a job posting in compliance with new transparency requirements) that their pay is less than what has been posted by their employer for the same or similar role, and the current employee files suit under the LAD or Equal Pay Act, the employer could be subjected to treble damages (far more severe than applicable sanctions under the act should it be found that the inequity was based on their protected status). Also noteworthy, an employee would have six years to file such a claim under the applicable statute of limitations under the Equal Pay Act. Employers should work with experienced counsel to learn more about best practices and compliance with pay transparency laws and beyond.

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