NEW JERSEY ENACTS NEW LAW OUTLAWING EMPLOYERS’ USE OF NON-DISCLOSURE AGREEMENTS TO SUPPRESS DISCLOSURE OF DISCRIMINATION CLAIMS AND SEVERELY CURTAIL THE USE OF FORCED ARBITRATION CLAUSES AND JURY WAIVER PROVISIONS

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.

S.121 appears to distinguish between not allowing an NDA regarding the “details relating to a claim of discrimination, retaliation or harassment”, which is now impermissible, as opposed to an NDA used to keep the fact of the settlement itself, the settlement amount, and the “underlying facts” confidential. In other words, the latter terms may still be permissible for NDA coverage. Under the new law, parties may still agree to confidentiality, but the law requires that any settlement agreement related to a claim of harassment, discrimination, or retaliation which includes an NDA must include a bold, prominently placed notice advising 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.”

Second, the law renders unenforceable and against public policy “any provision in an employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment.”  Indeed, the new law specifically states that no right or remedy provided by the New Jersey Law Against Discrimination – “or any other statute or case law” may be prospectively waived. This is important because mandatory arbitration agreements which take away an employee’s right to a court forum or a jury trial in their discrimination, harassment, or retaliation claims are expressly prohibited under a plain reading of this new law.

Another important aspect of this law is that it prohibits retaliation against individuals who refuse to sign agreements containing either waivers or NDAs. If an employer attempts to enforce any provision proscribed by the law, and the employee successfully sues, the employer would then be responsible for the attorneys’ fees and costs.

For violations of S.121, the law grants individuals a private right of action. Anyone desiring to sue under this new law would have two years from the accrual of any cause of action to sue in the New Jersey Superior Court. Prevailing plaintiffs may recover a variety of remedies as well as reasonable attorneys’ fees and costs.

If you are presented with a non-disclosure agreement or arbitration agreement call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help before signing away your rights.  Mashel Law, located in Morganville, New Jersey, is dedicated to protecting the rights of employees.