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New NJ Law Prohibits Non-Disclosures, Other Waivers for Harassment, Discrimination and Retaliation Claims

Employers should be aware of recently enacted New Jersey legislation which, while lauded as a protection against employees being required to maintain secrecy, has the potential to significantly impact the resolution of discrimination, harassment and retaliation claims. On Monday, March 18, 2019, New Jersey Governor Phil Murphy approved legislation amending the New Jersey Law Against Discrimination (“NJLAD”) and “other statutes” (as yet undefined) by prohibiting non-disclosure agreements and the waiver of certain rights in employment contracts and settlement agreements. This legislation appears to be a one-sided prohibition permitting non-disclosure provisions against the employer and eradicating a key motivation for settlement—confidentiality.

NDAs Against the Employee are Against Public Policy

Effective March 18, 2019, it is now against public policy for employment contracts, discrimination, harassment or retaliation related settlement agreements to contain non-disclosure agreements (“NDAs”) against the employee if it has the “purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment…” This prohibition pertains to any contracts or agreements entered into, renewed, revised or amended with any present or former employees. Parties may continue to include NDAs; however, the law prohibits employers from enforcing a NDA in an employment contract or settlement agreement relating to a claim of discrimination, harassment or retaliation. While the provision cannot be enforced against the employee, “[i]f the parties decide to include such a non-disclosure provision, it can be enforced against the employer unless the employee has “publicly reveal[ed] sufficient details of the claim so that the employer is reasonably identifiable.” In addition, settlements resolving claims of discrimination, retaliation or harassment “shall include a bold, prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”

Prohibition Against the Waiver of Substantive and Procedural Rights Related to Discrimination, Harassment or Retaliation Claims

In addition to the loss of confidentiality, the new law also provides that “[a] provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable,” and “[n]o right or remedy under the ‘Law Against Discrimination’ or any other statute or case law shall be prospectively waived.” For employers, this raises the question of whether the employer can enforce a jury trial waiver and compel the employee to resolve any disputes via arbitration. To the extent New Jersey Courts attempt to invalidate such provisions, there will likely be challenges arising out of the conflict between such an interpretations and the Federal Arbitration Act.

The anti-retaliation provision of the law prohibits employers from retaliating against an employee or prospective employee for refusing to sign an agreement that is deemed against public policy. Should an employer attempt to enforce an invalid provision, a prevailing plaintiff can recover: statutory remedies; “all remedies available in common law tort actions” and attorney’s fees and costs.

In light of the recent changes, employers are strongly encouraged to review any employment contracts, handbooks, arbitration provisions, severance agreements and other agreements that are impacted by the changes. Litchfield Cavo LLP attorneys are available to answer any questions you may have on this or other employment law issues.