October 19, 2019

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New Jersey Enacts Law Limiting Non-Disclosure Obligations in Settlement Agreements

On March 18, 2019, New Jersey Governor Phil Murphy signed into law Senate Bill 121, which prohibits nondisclosure clauses in settlement agreements relating to workplace discrimination, retaliation or harassment.

Effective immediately, the law renders unenforceable any provision in an employment contract that waives “any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment.” The law also does not permit prospective waivers of any right or remedy under the New Jersey Law Against Discrimination, or any other state statute or case law. These provisions, however, do not apply to collective bargaining agreements.

The new law states that any provision in an employment contract or settlement agreement “which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment . . . shall be deemed against public policy and unenforceable against a current or former employee who is a party to the contract or settlement.”  The law also provides that a non-disclosure provision as described above will be unenforceable against the employer if the employee publicly reveals “sufficient details” of the claim so that the employer is “reasonably identifiable.” Going forward, every settlement agreement that resolves discrimination, harassment or retaliation claims must also include a “bold, prominently placed notice” indicating that although the parties agree to maintain the confidentiality of the settlement and underlying facts, such a provision would be unenforceable as against an employer if the “employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.” The law makes clear that these provisions should not be construed as prohibiting employers and employees from entering into non-compete agreements and confidentiality agreements relating to proprietary information, such as non-public trade secrets, business plan and customer information.

Finally, under the recently amended law, employees are protected from retaliation if they refuse to enter into an agreement or contract that contains a provision deemed unenforceable and against public policy. The law provides a private right of action for individuals claiming a violation of the statute and available remedies include all those available in common law tort actions, as well as attorneys’ fees and costs.

© 2019 Proskauer Rose LLP.

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About this Author

Evandro Gigante, Labor Attorney, Proskauer Rose Law FIrm
Senior Counsel

Evandro Gigante is a Senior Counsel in the Labor & Employment Law Department. He represents and counsels clients through a variety of labor and employment matters, including allegations of race, gender, national origin, disability and religious discrimination, sexual harassment, wrongful discharge, defamation, and breach of contract. Evandro also counsels employers in connection with reductions in force and wage-and-hour issues, and advises clients on restrictive covenant issues, including, for example, confidentiality, non-compete, and non-solicit agreements. 

212.969.3132
Arielle Kobetz, Proskauer Law Firm, Labor and Employment Attorney
Associate

Arielle Kobetz is an associate in the Labor & Employment Law Department. She assists employers in a wide range of areas, including discrimination, wage and hour, and traditional labor.

Prior to joining Proskauer, Arielle served as a law clerk at the New York City Human Resources Administration, Employment Law Unit, where she worked on a variety of employment discrimination and internal employee disciplinary issues. 

212-969-3304