New Jersey Bans Non-Disclosure Provisions For Discrimination, Harassment and Retaliation Claims In Employment Contracts And Settlement Agreements

Non Disclosure in Employment Agreements

The force and rippling effect of the #MeToo Movement have shown no sign of slowing down.  The recent trend is for employers to write non-disclosure provisions into employment contracts and settlement agreements as a means to silence the details about discrimination and harassment legal claims.

However, on March 18, 2019, Governor Murphy signed into law Bill S121 which prohibits and voids any provision in an employment contract or settlement agreement designed to conceal the details relating to a claim of discrimination, retaliation, or harassment.   It significantly amends New Jersey’s expansive Law Against Discrimination (LAD), which protects current and former employees from discrimination, harassment and retaliation. Bill S121 explicitly states that no right or remedy provided by the LAD can be waived in the future.

The ban on non-disclosure provisions applies to new agreements signed on or after March 18, 2019.  While the law appears to apply only to new employee/employer agreements, the law’s ban does apply to new or renewed agreements with current employees, and to modifications of existing agreements.  

However, this bill’s language is far from crystal clear.  On one hand, it seems to prohibit a non-disclosure provision concerning the “details relating to a claim” of discrimination, harassment or retaliation.  On the other hand, the law appears to allow a non-disclosure provision that seeks to keep the existence of the settlement, the settlement amount, and the “underlying facts confidential.”  Further, if the employee “publicly reveals sufficient details of the claim so that the employer is reasonably identifiable,” then the employee will not be able to enforce the non-disclosure provision against the employer.

Importantly, the law also prevents an employer from taking any retaliatory action, “including but not limited to failure to hire, discharge, suspension, demotion, discrimination … or other adverse action, against a person who refuses to sign an employment agreement or settlement agreement that contains a non-disclosure provision “deemed against public policy and unenforceable.”  If an employer tries to force an employee into signing a non-disclosure provision that violates the new law, or otherwise tries to enforce any such provision in violation of the Act, an employee may sue, and if successful, would be entitled to reasonable attorney fees and costs related to the lawsuit.

Finally, while the law is designed to protect employees, who may want to reveal the details of their discrimination and harassment legal claims, the law does not prohibit an employer from requiring an employee to sign a non-compete contract or an agreement that prevents an employee from disclosing proprietary information, such as “non-public trade secrets, business plan and customer information.”

April 10, 2019
Author: Jessica S. Allen, Counsel
Practice Area Center: Employment Law
Practice Area Category: Non-Disclosure Agreements

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