New Jersey Federal Court Declines Invitation to Retroactively Apply Equal Pay Law

New Jersey Federal Court Declines Invitation to Retroactively Apply Equal Pay Law

February 5, 2019

On April 28, 2018 New Jersey Governor signed the Diane B. Allen Equal Pay Act into law. The Equal Pay Act amends New Jersey’s existing Law Against Discrimination (referred to as "LAD") by requiring equal pay across all protected classes. The law became effective on July 1, 2018. According to Judge William Martini for the U.S. District Court for the District of New Jersey in the case Perrotto v. Morgan Advance Materials, PLC, et. al., (D.N.J. Civ. No. 2:18-13825), this start date should be strictly applied.

Plaintiff Darla Perrotto worked for Morgan Advanced Materials, PLC and Morgan Advanced Ceramics, Inc. (both referred to here as "Morgan") from 2013, until she was terminated on April 5, 2018. Perrotto sued Morgan under the Equal Pay Act alleging that Morgan compensates women "substantially less" than their male coworkers for the same work. Perrotto additionally alleges that she complained about the pay disparity and that the company terminated her as retaliation for raising these issues.

Morgan asked the federal court to dismiss Perrotto's Equal Pay Act claims arguing that the law cannot provide Perrotto relief for allegations taking place before the law went into effect. The Court agreed with Morgan and dismissed the Perrotto's claims. In coming to this conclusion Judge Martini did not find any reason to upset the presumption that laws be applied moving forward, rather than retroactively, relying on two cases from the New Jersey Supreme Court. The two cases —James v. N.J. Mfrs. Ins. Co., 83 A.3d 70, 77 (N.J. 2014) and Johnson v. Roselle EZ Quick LLC, 143 A.3d 254 (N.J. 2016)— assert that legislation will only be applied retroactively when (1) it is directly intended to do so; (2) the legislation is intended to amend, or cure an ambiguity or other defect in an earlier law; or (3) the parties' expectations would warrant that it be applied retroactively.

Judge Martini found in favor of Morgan on all three issues, holding that the law was intended to be a "first of its kind" legislation providing additional protections under LAD. This, coupled with the fact that the law expressly was not intended to go into effect immediately, but rather more than a month after being signed, lead the court to dismiss Perrotto's claims. Perrotto's attorneys have filed a motion for reconsideration, asking Judge Martini to reevaluate his decision.

Judge Martini's decision should allow employers to breathe a sigh of relief, as a holding otherwise would have opened the door to claims from employees within the statute’s six year statute of limitations period. Rather, New Jersey employers should recognize that the Equal Pay Act will impact their pay practices moving forward and focus resources on compliance.

We will continue to monitor this case while Perrotto's request for reconsideration is pending, and during any appeals.