In response to #MeToo, New Jersey legislators introduced a bill that would preclude non-disclosure agreements in settlement agreements, but New Jersey took the ban even further than most states and applied the ban to claims of discrimination, harassment or retaliation of any kind. Governor Murphy signed a revised version of this bill on March 18, and it is now law, effective immediately, that non-disclosure agreements that attempt to limit the details related to any claims of discrimination, harassment or retaliation are always unenforceable against the current or former employee, and will become unenforceable against the employer if the current or former employee publicly discloses sufficient details of the claim such that the employer is reasonably identifiable. It is unclear as of yet if "details related to a claim of discrimination, retaliation, or harassment" includes the settlement retaliation, or harassment" includes the settlement terms related thereto, or only the underlying details of the actual harassment, discrimination or retaliation, but based on the broad language of the law, it seems likely that it was intended to encompass both the underlying facts and the settlement agreement details. The law also requires settlement agreements regarding discrimination, harassment and retaliation to contain particular language informing the employee about this law. The law also imposes a non-retaliation provision, a private right of action, and an attorneys' fees award against anyone who attempts to enforce these unenforceable non-disclosure provisions.
Separately, the law prohibits employment agreements from containing any waiver of substantive or procedural rights or remedies relating to any claims of discrimination, retaliation or harassment. Although it is unclear if this prohibition against waiver was intended to include the right to a jury trial for discrimination, harassment and retaliation claims, it is likely that plaintiffs' attorneys will interpret the law in that manner and attempt to use it to avoid arbitration agreements. However, like many state bans on arbitration that we have seen post #MeToo, it is very likely that, if challenged, the FAA would supersede it.
New Jersey employers should review all settlement agreement templates they may be using and be sure to update them.
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