March 28, 2019
The NJLAD is New Jersey’s central anti-discrimination law. NJLAD prohibits employers from discriminating against employees in any job-related action, including recruitment, interviewing, hiring, promotions, discharge, and compensation, as well as the terms, conditions, and privileges of employment, on the basis of any of the law’s specified protected categories.
The new bill, S121, amends the NJLAD in two important ways, and applies to all agreements entered into, renewed, or modified on or after March 18, 2019.
The new law provides that confidentiality or non-disclosure agreements in employment contracts or settlement agreements are unenforceable. It also prohibits arbitration clauses and jury waivers in employment contracts that relate to claims of discrimination, retaliation, and harassment.
S121 also defines a non-disclosure provision as “[any] provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.” Although S121 deems such provisions non-enforceable, it still permits employees and employers to enter into an agreement containing such confidentiality and/or non-disclosure provisions, but only if both parties entering the agreement consent to the inclusion of such provisions. Relatedly, the new law has an anti-retaliation provision which prohibits employers from retaliating against an employee that does not want to enter into an agreement with such a non-disclosure provision. Under the new S121, mandatory non-disclosure provisions are entirely unenforceable.
But what about confidential company information? The new law essentially gives employees the ability to disregard non-disclosure provisions in settlement agreements relating to discrimination, retaliation or harassment claims. However, it also provides a remedy that releases employers from their non-disclosure obligations under the agreement if the employee, in opposition to such a non-disclosure obligation, publicly reveals enough information that makes the employer “reasonably identifiable.” This offers a way for employers to protect their proprietary information in the event that such information is disclosed by an employee.
In addition, S121 provides that any provision in an employment contract that waives a substantive or procedural right or remedy, including those falling under NJLAD or any other statute or case law, as related to a claim of discrimination, harassment or retaliation, is void as a matter of law. Therefore, any employment contract that requires an employee to waive their right to a jury or to arbitrate a claim of discrimination, retaliation, or harassment, is void as a matter of law under the new S121.
Interestingly, the new law does not define an “employment contract,” leaving its definition up for interpretation by courts. As such, it is plausible that plaintiff’s counsel could make the argument that an “employment contract” could also refer to settlement and/or severance agreements, thus broadening the scope of applicability.
This newest law amending NJLAD follows the trend of legal responses to the #MeToo movement in the last eighteen months, in which various state legislatures have made significant changes in order to be more responsive to the changing legal landscape in the employment space. Many states, including New York, have adopted similar bans on non-disclosure provisions in agreements related to discrimination, retaliation and harassment in the workplace.
RPJ counsels companies, organizations, and individuals about best company practices and offers branded training programs, both live and on one, in the areas of anti-harassment and discrimination prevention. For more information on our programs, please visit our training programs page. You can register your company for online sexual harassment prevention and anti-discrimination training through AltaClaro.
This article is intended only as a general discussion of these issues. It is not considered to be legal advice or relied upon. If you need assistance with a particular employment, intellectual property, or corporate issue, RPJ Associate Nikita (“Niki”) Bhargava would be pleased to consider providing additional details or advice about specific situations. Ms. Bhargava is admitted to practice law in New York and New Jersey. Attorney Advertising.