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New Jersey Bans Non-Disclosure Agreements For Harassment Or Discrimination Claims

Your to-do list probably got longer on March 18. That day, Governor Murphy signed a major new law widely seen as an answer to the #MeToo movement’s call for more openness about discrimination, harassment and retaliation in the workplace.

Known as S121, it bans non-disclosure agreements in employment contracts or settlements that aim to hide details of discrimination, retaliation or harassment claims.

The law means major changes for New Jersey employers and raises important legal questions. It’s effective as of March 18, 2019, so employers would be wise to review all contracts and settlements with employees signed, renewed or changed after that date and moving forward.

What Does S121 say, In Essence?

The law’s central provisions are simple enough to state but the fine print is important and S121’s implications are broad and complex.

In New Jersey, all employment contract and settlement provisions having to do with claims of discrimination, retaliation, or harassment are now against public policy and unenforceable if they:

• waive the employee’s rights or remedies relating to a claim;
• make the employee conceal the details of a claim.

Those are the basics, but S121’s many angles and impacts should be considered and discussed with an experienced business law attorney.

For example, notice the law isn’t limited to claims of discrimination, harassment, and retaliation based on specific categories of harassment or discrimination such as race, gender or sexual orientation. Presumably, the law pertains to a broad array of recognized bases for discrimination.

Note also that S121 doesn’t apply to collective bargaining agreements.

Perhaps most importantly, S121 directly affects your ability to have employees agree to arbitration or mediation. Moreover, because employees can’t be silenced about claims while employers might be, it reduces a main advantage of arbitration – avoiding the public courts.

However, S121 gives back a little of this ground lost by employers. If the employee publicly reveals sufficient details of their claim to essentially identify the employer, the employer is also freed up to give their side of the story.

S121 is groundbreaking and far-reaching, so you may want to keep an eye on any challenges and revisions that could alter its reach. For example, one New Jersey organization questions whether the provision dealing with employees waiving their rights would be upheld, if challenged.

What Can You Do Right Now?

As eyebrow-raising as the new law may seem, it might not result in a long to-do list right away. Consider carefully revisiting, perhaps with your attorney, the contracts you’re asking new hires to sign as well as any contracts with current employees that are renewed, amended or revised.

Also, of course, prevention is key. Your workplace presumably already has policies and training to prevent cases of discrimination, harassment and retaliation, and it’s rarely the wrong time to renew your company’s commitment to them.

Understanding how this affects the small business economy is part of our job here at Santomassimo Davis LLP, as we primarily focus in providing expert Outside General Counsel for a variety of law firms and legal issues related to Corporate and Business Law  in New Jersey, New York and Pennsylvania.

Thanks for reading our latest blog talking about topical legal issues facing small businesses. Learn more from our Outside General Counsel Blogs.

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