The New Jersey Supreme Court recently opened the door for employees alleging salary discrimination to challenge compensation decisions made many years before the filing of their lawsuit. The decision will likely have a negative impact on employers.
Three female Seton Hall University (“SHU”) professors hired more than 20 years ago sued SHU alleging salary discrimination based on their age and gender. The professors acknowledged that SHU did not make any discriminatory pay decisions in the two years that preceded the filing of their lawsuit. Rather, the basis for their lawsuit was that SHU made alleged discriminatory pay decisions at the time of the professors’ respective hires and that each paycheck they received since that time contained an unlawful amount. The professors sought damages from the University dating back to their respective dates of hire.
New Jersey law generally requires claims of employment discrimination to be filed within two years from the date of the employer’s alleged discriminatory act. Although SHU argued that the relevant compensation decisions were made more than twenty years before the lawsuit’s filing, the professors argued that each paycheck they received during their employment constituted a discriminatory act that continues (and, in effect, revives) each prior alleged discriminatory paycheck.
The trial court dismissed the professors’ lawsuit, and, on appeal, the New Jersey Appellate Division affirmed. Both courts were persuaded by the 2007 United States Supreme Court Ledbetter decision that analyzed and dismissed as untimely a similar claim under federal law. As reported in an ealier blog posting that can be found here, in response to the Ledbetter decision, the United States Congress amended federal law to significantly expand employees’ ability to sue for discriminatory compensation practices.
The New Jersey Supreme Court reversed the lower courts, stating that for 30 years it has been the public policy of the State of New Jersey to treat each paycheck that reflects discriminatory wages as a separate unlawful act that can be challenged in the courts. The Court permitted the professors to proceed with their claims even though the alleged discriminatory compensation decisions were made at least two decades before they filed their lawsuit. With respect to damages, the Court held that if plaintiffs were able to prove their claims of gender and/or age discrimination, they would only be entitled to damages for the two years that preceded the filing of their lawsuit. In reaching this decision, the Court aligned state pay discrimination law with federal law.
The New Jersey Supreme Court’s decision is bad news for employers who may now have to defend compensation decisions they made more than two years prior to the date an employee files a lawsuit. This could entail justifying salary determinations made decades ago for which documentation and witnesses may not longer exist. On the bright side, the Court’s ruling does limit the damages that may be awarded to employees alleging pay discrimination to the two-year period prior to the filing of their lawsuit which may, depending upon the case, significantly limit the amount of money that could be awarded to them.