Non-Disparagement Provisions Not Barred By NJLAD's #MeToo Amendments, For Now

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In March 2019, in response to the #MeToo movement, New Jersey enacted N.J.S.A. 10:5-12.8, which amended the New Jersey Law Against Discrimination (NJLAD) to prohibit,...
United States Employment and HR
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In March 2019, in response to the #MeToo movement, New Jersey enacted N.J.S.A. 10:5-12.8, which amended the New Jersey Law Against Discrimination (NJLAD) to prohibit, in employment contracts or settlement agreements, any non-disclosure or confidentiality provisions that have "the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment." In Savage v. Township of Neptune, No. A-1415-20 (App. Div. May 31, 2022), the Appellate Division confronted the question of whether N.J.S.A. 10:5-12.8 also applies to non-disparagement provisions, and concluded it does not.

In Savage, plaintiff Christine Savage, a former sergeant with the Neptune Township Police Department, sued the department and its leadership under the NJLAD, alleging sex-based discrimination, harassment, and retaliation. In July 2020, the parties entered into a settlement agreement that did not have a non-disclosure provision, but that included, in relevant part, the following mutual non-disparagement clause:

The parties agree not to make any statements written or verbal, or cause or encourage others to make any statements, written or verbal regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party. The parties agree that this non[-]disparagement provision extends to statements, written or verbal, including but not limited to, the news media, radio, television, internet postings of any kind, blogs, social media, (e.g., Facebook, Instagram, Twitter, or the like), consumer or trade bureaus, other state, county or local government offices or police departments or members of the public. Neptune Township will respond to inquiries from prospective employers with dates of employment and positions held. The parties agree that non-disparagement is a material term of this Agreement[.]

(emphasis added by court). Within days of receiving her settlement payment, the plaintiff made a series of statements to a news reporter concerning her former employer, including that she was "abused," "financially choked out," "oppressed," and that the police department was a "good 'ol boy system." In response, the former police director and the chief of police filed a motion to enforce the non-disparagement clause of the settlement agreement and sought damages. The plaintiff claimed she did not breach the agreement because the provision was against public policy and unenforceable under N.J.S.A. 10:5-12.8(a), since it prohibited her from making any statements about defendants' past behavior and thus, "had the purpose or effect of concealing the details relating to her claims of employment discrimination, retaliation, and harassment."

In rejecting that argument, the appellate panel emphasized that N.J.S.A. 10:5-12.8(a) was enacted to address confidentiality provisions that "have a chilling effect on individuals who have experienced discrimination or harassment and would have reported violations but for the non-disclosure agreements." In evaluating the parties' non-disparagement provision, the court reasoned its purpose "was to mutually prohibit the parties from making disparaging statements about each other, and not to 'conceal' the details relating to plaintiff's [NJ]LAD claims."

Importantly, the court recognized a potential "overlap" between confidentiality and non-disparagement provisions, since "describing the details of a [NJ]LAD claim could be disparaging." The court dismissed that concern, however, finding the defendants had agreed the plaintiff could discuss the details of the sexual discrimination and other conduct giving rise to the settlement agreement. Thus, the court concluded the non-disparagement clause was enforceable. Nevertheless, the court also concluded the plaintiff did not violate the clause, finding her comments were "statements about present or future behavior, not comments about past behavior prohibited under the plain language of the agreement."

Beyond addressing the application of N.J.S.A. 10:5-12.8 to non-disparagement provisions, Savage is also the first opinion to address an initial question that arose following the amendment's passage: whether its scope – "the details relating to a claim of discrimination, retaliation, or harassment" – covered settlement terms resolving such claims. While not directly addressed by the appellate panel, the decision implicitly answers that question in the negative, stating "the plain language of the law" indicates that it was intended to prevent confidentiality only as to the "details of a [NJ]LAD claim."

The court's limiting of N.J.S.A 10:5-12.8 to non-disclosure or confidentiality provisions, however, may be short-lived. In an apparent direct response to the Savage decision, on June 27, 2022, the New Jersey State Senate introduced S2930, which further amends N.J.S.A. 10:5-12.8 to expressly include non-disparagement provisions. The proposed amendment provides that a:

provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment, including, but not limited to, a non-disclosure or non-disparagement provision, . . . shall be deemed against public policy and unenforceable against a current or former employee . . . who is a party to the contract or settlement.

In a statement attending the bill, the legislature expressed its intent is to clarify "that the current law on non-disclosure provisions also prohibits certain non-disparagement provisions in employment contracts."

As the court's opinion makes clear, the distinction between non-disparagement and non-disclosure provisions – and between prohibited disparaging and permitted non-disparaging comments – can easily blur when an employee makes public statements relating to the employee's actual or alleged treatment by an employer. While the Appellate Division opinion reinforces the availability, perhaps temporarily, of non-disparagement provisions in employment agreements or settlements, employers should consider taking steps to avoid including provisions that may be construed as concealing the details relating to a claim of discrimination, retaliation, or harassment, given the potential overlap between confidentiality and non-disparagement provisions. Employers may also wish to consider carveouts in non-disparagement clauses that specifically address the applicability of N.J.S.A. 10:5-12.8 to such provisions.

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.

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