By: Cailin Bernazzoli, Law Clerk and JD Candidate
Change may soon be on the horizon for New Jersey Employers. On May 12, 2022, Assemblymembers Moriarty, Danielsen and Sumter introduced Assembly Bill 3937, which proposes important changes for pay transparency and the way in which employers announce external job postings (“AB3937”). On December 11, 2023, AB3937 was approved by the Assembly Consumer Affairs Committee, with amendments, and referred to the Assembly Appropriation Committee for consideration. If the Bill passes both Houses by a majority vote and is approved by Governor Murphy, it will become law, joining the City of Jersey City and a growing number of states, including California, New York and Connecticut, which have already passed similar legislation.
As amended, AB3937 would require employers, defined as any person, company, corporation, firm, organization, or association with ten (10) or more employees, to disclose the hourly wage, salary or a range of compensation and a general description of benefits offered in each posting for promotions, new jobs, and transfer opportunities that are externally advertised. Each failure to include the required information would constitute a separate violation. Additionally, the Bill would require employers to make their employees aware of any opportunities prior to making any promotion decisions. Each failure to announce an opportunity internally would also constitute a separate violation, subject to a civil penalty in an amount not to exceed $1,000 for the first violation, $5,000 for the second violation and $10,000 for each subsequent violation.
What Opponents Are Saying: The Chamber of Commerce of Southern New Jersey (“CCSNJ”) released a statement opposing the Bill’s passage. In its March 23, 2023 Memorandum, the CCSNJ based their opposition, in part, on the Bill’s restriction on employers’ flexibility in making internal decisions and highlighted the potentially harmful implications for small businesses. Hillary Chebra, CCSNJ Opposition to A3937, Chamber of Commerce Southern New Jersey (Mar. 23, 2023), https://business.chambersnj.com/positionpapers/Details/ccsnj-opposition-to-a3937-152189. The New Jersey Business & Industry Association (“NJBIA”) also initially expressed concern that this legislation would negatively impact New Jersey employers; however, it has since changed to a neutral position after successfully advocating for several committee amendments (relating to the rights of disgruntled employees to bring civil suits against employers and exempting small businesses with nine (9) or less employees). See Alexis Bailey, Bailey Discusses Bill Requiring Salary Transparency in Job Postings, New Jersey Business & Industry Administration (Mar. 24, 2023), https://njbia.org/bailey-discusses-bill-requiring-salary-transparency-in-job-postings/; Bringing Salary Transparency Bill into Focus, New Jersey Business & Industry Administration (Dec. 1 592185, 2023), https://njbia.org/bringing-salary-transparency-bill-into-focus/
What Proponents Are Saying: Advocates of AB3937 have argued that this legislation will greatly benefit New Jersey’s workforce. Supporters have claimed that this Bill will streamline the hiring process by attracting applicants who are comfortable with the compensation range, therefore saving time for both applicants and hiring teams alike. Additionally, they believe the Bill will help to prevent the practice of undercutting new hires based on discriminatory factors. Anjali Mehrotra, Wait for What? New Jersey Needs Pay Transparency Now, Insider NJ (Apr. 12, 2023), https://www.insidernj.com/wait-for-what-new-jersey-needs-pay-transparency-now/.
With the 2022-2023 legislative session coming to an end, it is unclear whether this Bill, and its Senate counterpart, will pass through both Houses and reach Governor Murphy during the current session. However, there are things employers can do to be proactive in the interim, and ensure a smooth transition to compliance, such as:
- Review current internal recruiting and hiring practices;
- Revise current and future job descriptions;
- Review current pay ranges to ensure ranges are consistent with the market, and adjust, if necessary; and
- Provide training to those employees involved in the hiring process and negotiation of pay for new hires.
We will continue to keep you apprised of the status of Assembly Bill 3937 as it works its way through the legislative process. Our professionals stand ready to provide assistance and guidance with all your employment matters.