Articles Posted in Arbitration

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Clear evidence the seismic effects of the national #Me Too movement has reached the shores of New Jersey occurred when New Jersey Governor Phil Murphy recently signed into law S.121 which effectively stops employers from requiring employees to sign nondisclosure confidentiality agreements – commonly referred to as “NDAs” – when settling employment discrimination, harassment, or retaliation claims. The use of NDAs has become a notorious legal tool used to protect serial harassers and abusers from the shaming cleanse of public disclosure. Further, the law also severely limits an employer’s ability to impose forced arbitration clauses and jury waiver clauses on its employees.

Following other states such as California which have banned the use of NDAs in settlement agreements and employment contracts, proponents of S. 121 argue that it adds new protections for victims of serial abusers in the workplace. “Non-disclosure agreements have, for a long time, been used to silence and intimidate the victims of sexual assault and harassment,” said Senator Weinberg (D-Bergen), one of the law’s chief architects. “Too many victims have been forced to suffer in silence for far too long, leaving abusers to continue to prey on countless women with impunity. Limiting these so-called ‘confidentiality agreements’ will help lift the secrecy that allows abusers to carry on abusing and make our workplaces safer for everyone.”

S.121 has two important components. First, it renders any term in an employment contract or settlement agreement unenforceable against a current or former employee if it “has the purpose of concealing the details relating to a claim of discrimination, retaliation, or harassment.”  Importantly, these broad limitations on NDAs apply to new agreements which are executed on or after the law’s effective date of March 18, 2019.  While the new law does not appear to apply retroactively, the law’s restrictions would apply to new or renewed agreements with existing employees, and to modifications of previous agreements. However, NDAs regarding non-public trade secrets and proprietary information as well as non-competition provisions are specifically carved out from the law’s reach.

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On January 17, 2016, in a published decision, the New Jersey Superior Court, Appellate Division, invalidated a mandatory arbitration clause found in an employee handbook. See Morgan v. Raymours Furniture Co., 443 N.J. Super. 338 (App. Div. 2016). This was a significant victory for employee rights across our State.

Plaintiff Grant W. Morgan worked for Defendant Raymours Furniture Company (“Raymours”) and electronically signed a company handbook which contained a mandatory arbitration clause. The company handbook, like almost every other company or employee handbook signed in this State, also contained a disclaimer provision that read that nothing in the handbook created a promise of continued employment or an employment contract.

After Mr. Morgan electronically signed the company handbook, he started complaining about age discrimination in the workplace. Raymours immediately confronted him with an ultimatum — that he either sign a stand-alone arbitration agreement or his employment would be terminated. Plaintiff refused to sign the stand-alone agreement and Raymours fired him.