NJ Prohibits Non-Disclosure Agreements in Harassment Settlements

NJ Prohibits Non-Disclosure Agreements in Harassment Settlements

On March 18, 2019, New Jersey Governor Murphy signed a bill, which is effective immediately and renders non-disclosure clauses in settlement agreements or employment contracts unenforceable against the employee. This applies to any clause in a settlement agreement which “has the purposed or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.”  In practical terms, this means if you settle a discrimination claim with an employee or former employee, you cannot prohibit them from going public with their story. 

If a non-disclosure provision is included in the settlement agreement, it can be enforced against the employer – unless the employee has publically revealed sufficient details so the employer is identifiable.  If the employee does reveal identifiable information about the employer, the non-disclosure provision becomes unenforceable against the employer.  Accordingly, employers should think carefully before including any non-disclosure provision.

The bill requires all employers to include a disclaimer in all settlement agreements which resolve a claim of discrimination, retaliation, or harassment.  That disclaimer must be bold and prominent and state: “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.”  This requirement appears to apply regardless of whether or not the settlement includes such a non-disclosure clause.

Employers are also now prohibited from requiring employees to sign prospective waivers of any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment.  This may apply not only to waivers of liability but also jury trials and arbitration agreements. That aspect of the bill will need further clarification.

The bill specifically does not prohibit employers from requiring employees to sign non-compete agreements, and proprietary information or trade secret confidentiality agreements.

This bill specifically applies prospectively – and not retroactively.  It applies only to those agreements entered into, renewed, or modified on or after the effective date of the bill.

If you find yourself challenged with questions regarding Non-disclosure agreements, please do not hesitate to contact Laddey, Clark & Ryan’s Employment and Labor Practice Group: Thomas N. Ryan Esq. (tryan@lcrlaw.com), Ursula H. Leo, Esq. (uleo@lcrlaw.com), Jessica A. Jansyn, Esq. (jjansyn@lcrlaw.com), or Nicole C. Tracy, Esq. (ntracy@lcrlaw.com). Our attorneys can also be reached by phone at (973) 729-1880.