Did New Jersey Just Try to Ban Employment Arbitration Agreements?
On March 18, 2018, the New Jersey Law Against Discrimination (NJLAD) was amended to prohibit prospective waivers of substantive and procedural rights or remedies relating to a claim of discrimination, retaliation, or harassment and that provisions in employment contracts waiving such rights shall be deemed against public policy and unenforceable. The new amendment further provides that “no person shall take any retaliatory action, including but not limited to failure to hire, discharge, suspension, demotion, discrimination in the terms, conditions, or privileges of employment, or other adverse action, against a person, on grounds that the person does not enter into an agreement or contract that contains a provision deemed against public policy.”
Notably, the new law does not specifically reference arbitration or arbitration agreements. However, it seemingly could be read to prevent employers from requiring employees to sign agreements to arbitrate future disputes that may arise between them and forgo the right to bring a civil action in State or Federal court.
While employers should take note of the new law, to the extent that it purports to bar the use of or impede the enforcement of an arbitration agreement, there is a strong argument that it is preempted by the Federal Arbitration Act. We will continue to monitor and report on further developments concerning the new law.