Confidential settlement agreements reached between employers and employees resolving claims of discrimination, retaliation, and harassment may not be so secret anymore.

On March 18, 2019, New Jersey Governor Phil Murphy signed into law Senate Bill 121, which amends the New Jersey Law Against Discrimination, N.J.S.A. 10:5-12 (“NJLAD”), by declaring unlawful and unenforceable any provision in any employment contract or settlement agreement concealing, or attempting to conceal, details relating to a claim of discrimination, retaliation, or harassment. Furthermore, and perhaps even more concerning to employers, the amendment prohibits the contractual waiver of any substantive or procedural rights or remedies relating to a claim of discrimination, retaliation or harassment.

Summarizing, effective March 18, 2019:

  • Provisions in employment contracts waiving (or purporting to waive) substantive or procedural rights or remedies relating to discrimination, retaliation, or harassment claims are unlawful;
  • Nondisclosure clauses in employment contracts and settlement agreements relating to workplace discrimination, retaliation, or harassment are unenforceable against current or former employees;
  • All settlement agreements between employers and employees resolving claims of discrimination, retaliation, or harassment must include “a bold, prominently placed notice 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”;
  • Employers may not retaliate against an employee for refusing to sign an employment-related contract containing a waiver or nondisclosure provision relating to discrimination, retaliation or harassment;
  • Any employer who attempts to enforce a provision deemed void in violation of public policy under the Amendment will be liable for reasonable attorneys’ fees and costs incurred by the employee in defending that action;
  • Employees aggrieved by any employer violation of the Amendment may prosecute their claims by filing a lawsuit in the Superior Court of New Jersey; and
  • Claims brought pursuant to the Amendment have a 2-year statute of limitations, are fee-shifting, and are not exclusive of other statutory, common law, or other remedies available to employees.

The Amendment expressly excludes and does not apply to collective bargaining agreements between an employer and the collective bargaining representative of the employees. Similarly, the Amendment by its own terms does not seem to extend to employer non-compete, non-solicit, non-disclosure and confidentiality agreements.

Beyond that, however, the breadth and scope of the Amendment is sweeping. It appears to extend to “any” employment contract or settlement agreement that waives substantive or procedural rights and remedies relating to NJLAD claims. While it remains to be seen how this new law will be applied by the courts, the language of the Amendment may prohibit the enforcement of an employment agreement requiring the arbitration of discrimination, retaliation or harassment claims. In other words, an employer who seeks to enforce an arbitration clause against an employee pursuing discrimination, retaliation or harassment claims might not prevail in compelling arbitration and may have to pay the employees’ legal fees resulting from it.

Furthermore, settlement agreements between employers and employees relating to NJLAD claims may not require employees to conceal claim details. It appears employers may make confidential other terms and conditions of an employee settlement agreement, such as the settlement amount, payment terms, and consideration for the agreement, but claim details clearly may not be suppressed.

What does this mean for employers? From a practical perspective, going forward, any settlement agreements resolving claims of discrimination, harassment or retaliation must include the bold disclaimer against confidentiality. Additionally, employers must be mindful of the broad prohibition against confidentiality of claim details; once taken for granted, employers now must exercise care in seeking to implement and enforce any confidentiality with respect to an employee settlement agreement resolving NJLAD claims. Furthermore, given the seemingly broad application of the Amendment, employers should review their current employment contracts and other onboarding documents, which may be in conflict with the new law, to confirm compliance on a going-forward basis.

Whether you are an employer seeking guidance or concerned about compliance with respect to this new law, or an employee seeking recourse from discrimination, retaliation or harassment in the workplace, the labor and employment attorneys at Stark & Stark are here to help.