With the stroke of a pen, Governor Phil Murphy has forever changed the dispute resolution process for employees and employers in New Jersey by rendering unenforceable any provision in an employment contract or settlement agreement that waives "any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment." As of March 18, 2019, Senate Bill 121 amended New Jersey's long-standing Law Against Discrimination ("NJLAD") to prohibit any contractual provision that conceals "the details relating to a claim of discrimination, retaliation, or harassment ...."
Under the new law, any such agreement is now void as "against public policy and unenforceable against a current or former employee who is a party to the contract or settlement" if the provision has "the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment." Additionally, employees are now protected from retaliation under the NJLAD if they refuse to enter into a contract with a provision prohibited by the new law. Backing this up, employees have a private right of action for violation of the statute under common law tort theories and can recover reasonable attorneys' fees and costs.
Notably, the new law applies to all existing and future agreements, except collective bargaining agreements. The law also preserves the enforceability of certain restrictive covenants, including non-competition agreements and provisions protecting confidential and proprietary information.
As a result of the new law, employers have some work to do. Existing contracts need to be reviewed for unenforceable provisions, appropriate amendments to contracts that violate the new law must be made, and future contracts cannot contain these unenforceable provisions. he new law further provides that all agreements settling claims under the NJLAD must contain a prominent and bold notice provision stating: "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."
The new law may, in fact, raise more issues than it promises to solve. Real questions remain as to whether: (1) any form of arbitration agreement will remain enforceable under the NJLAD; (2) the Federal Arbitration Act will preempt this change to state law; and (3) contractual provisions limiting access to courts, like jury waivers, will remain enforceable. The bottom line, though, is that employees and employers will now have to deal with the ramifications of no longer being able to agree to keep the nature and details of their resolution of NJLAD claims confidential.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.