On March 18, 2019, New Jersey passed aggressive legislation severely curtailing the use of arbitration agreements and non-disclosure agreements in connection with discrimination, retaliation or harassment claims under the New Jersey Law Against Discrimination (“LAD”). Specifically, the law provides the following significant changes to existing law:
- Provisions in any employment contract or settlement agreement that have the purpose or effect of concealing the details of a discrimination, retaliation or harassment claim (i.e., “non-disclosure” provisions) are deemed against public policy and unenforceable against the employee. This applies regardless of whether the employee agreed to – or even requested – such confidentiality. If, however, an employee publicly reveals the details of his or her claim such that the employer is “reasonably identifiable”, then any non-disclosure applicable to the employer will also be unenforceable.
- Every settlement agreement resolving a discrimination, retaliation or harassment claim must now include a bold, prominently placed disclaimer in the agreement. This notice must explain 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.
- Provisions in employment contracts that waive any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment will be deemed against public policy and unenforceable. This language appears to render arbitration agreements that cover discrimination, retaliation and harassment claims under the LAD unenforceable. However, there is a strong likelihood that this provision runs afoul of the Federal Arbitration Act and we expect a challenge on these grounds to be on the horizon.
- Non-competition and non-disclosure agreements are expressly carved out. Nothing in the law prevents employers from requiring employees to sign agreements not to enter into competition with the employer (either during or after employment) or to disclose the employer’s proprietary information.
- The law takes effect immediately. The law was signed on March 18, 2019 and is effectively immediately. It applies to all contracts and agreements entered into, renewed, modified, or amended on or after the date the law took effect.
- The law also contains an anti-retaliation provision. This provision makes it illegal to take any retaliatory action against a person for his or her failure (or refusal) to enter into an agreement or contract that contains a provision deemed unenforceable or against public policy under this new law. The law also provides for a private right of action for any person claiming to be aggrieved by a violation of this law and includes a fee-shifting provision for prevailing plaintiffs.