Real World Impact: The New Jersey legislature has passed a bill that, if signed, would require covered employers to disclose the compensation range and general description of benefits and other compensation programs for any job postings or advertisements.
Background: New Jersey may soon join the ranks of an ever growing number of states that have implemented pay transparency laws with the recent passage of a pay transparency bill by the state legislature. With the goal of providing transparency to help close pay gaps and bolster wage equality overall, this bill will enhance the obligations on employers with respect to compensation practices and supplement the robust Diane B. Allen Equal Pay Act.
The New Jersey Pay Transparency Bill, passed by the legislature on September 26, 2024, will require employers with 10 or more employees over 20 calendar weeks that do business, employ workers, or take applications in New Jersey to disclose the compensation range and general description of benefits and other compensation programs for any job postings or advertisements. The bill does not preclude employers from increasing compensation when making an offer of employment.
Under the bill, employers are also required to keep records of all job postings, including the disclosed compensation and benefits information, which could result in significant penalties if not properly maintained. This new requirement puts increased pressure on businesses to document and justify their pay practices to ensure compliance.
In addition to the pay transparency requirements for job postings, the new bill also mandates that employers provide notice of promotional opportunities to current employees. Promotional opportunities are defined as “change in job title and an increase in compensation.” Before making a promotion decision, employers must inform all eligible employees about the opportunity, providing everyone has a chance to apply or express interest. Certain promotional decisions are carved out of this requirement, including promotions awarded based on years of experience or performance or promotions made on an “emergent basis due to an unforeseen event.” For businesses, this will require additional planning to ensure timely communication and avoid inadvertently overlooking qualified candidates. Employers will also be required to maintain a formalized system for tracking and communicating all promotional opportunities to their workforce.
Civil penalties will be imposed on employers for violations of the proposed law payable to the Commissioner of Labor and Workforce Development, in amounts not to exceed $300 for a first violation and not to exceed $600 for each subsequent violation. An employer’s failure to comply with the requirements for a specific job opening, transfer opportunity or promotion will be considered one violation, regardless if the opportunity is listed on multiple forums. Notably, the bill does not provide a private right of action.
The Bottom Line
Governor Murphy is expected to sign the bill into law, which will take effect seven months later. To prepare, New Jersey employers should begin reviewing their compensation structures to determine accurate pay ranges for each role. They should also develop procedures for maintaining records of all job postings and training hiring managers and HR personnel on these new requirements.
