Individual Paychecks Re-start the Statute of Limitations in Discriminatory Compensation Claims Under the NJLAD

Peace of mind. That is what the two-year statute of limitations period applicable to claims filed under the New Jersey Law Against Discrimination (“LAD”) afforded employers. With respect to discriminatory compensation claims, however, the New Jersey Supreme Court’s decision in Alexander v. Seton Hall University has destroyed that peace of mind, holding that each individual paycheck effecting a discriminatory compensation decision constitutes an actionable unlawful employment practice. No longer is the two-year statute of limitations measured from the date of the compensation decision.

At issue before the Court in Alexander were the claims of three female professors who alleged that they were paid unequal wages on the basis of gender and age in violation of the LAD. The Appellate Division had affirmed the trial court’s decision that a portion of the professors’ claims were untimely because the compensation decisions at issue were made more than two years before the professors filed their complaint and thus those claims were barred by the two-year statute of limitations applicable to LAD claims. In their appeal to the New Jersey Supreme Court, the professors argued that no portion of their pay claims were time-barred and that “each paycheck that perpetuates a discriminatory wage continues the original LAD violation and sweeps in all prior and current discriminatory, disparate paychecks.” The University, on the other hand, argued that the statute of limitations period commenced as of the date that the allegedly discriminatory compensation decision was made. The New Jersey Supreme Court did not accept the professors’ “continuing violation” argument in its entirety but did hold that each paycheck received by an employee serves to “restart” the two-year limitations period. Logically then, a plaintiff should be able to assert claims for discriminatory compensation only with regard to compensation received within two years of the filing of plaintiff’s complaint – and the Supreme Court so held.