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New Jersey Curtails Use of Employment Nondisclosure Agreements


In the wake of the #MeToo movement and heightened attention on sexual harassment claims and settlements, New Jersey has enacted legislation that prohibits certain nondisclosure agreements in employment contracts and settlement agreements.


Senate Bill 121 declares any provision in any employment contract or settlement agreement concealing, or attempting to conceal “the details relating to a discrimination, retaliation or harassment claim” unlawful and unenforceable against current or former employees. The bill applies to all agreements entered into, renewed or modified after March 18, 2019.


The legislation amends the New Jersey Law Against Discrimination (NJLAD), which is the state’s central anti-discrimination law. It prohibits employers from discriminating against employees in any job-related action, including recruitment, hiring, firing and compensation, on the basis of any of the law’s specified protected categories.


The new bill follows a growing trend in which state legislatures are becoming more responsive to the changing legal landscape in the workplace. Many states, including New York and California, have adopted similar laws curtailing the use of nondisclosure agreements in the workplace. However, compared to the laws in those states, the scope of New Jersey’s prohibitions extends well beyond sexual harassment, assault or sex discrimination claims.


Key among the amendments in Senate Bill 121 are the following:

· All settlement agreements between employers and employees resolving claims of discrimination, retaliation or harassment must include a notice that while the parties have agreed to keep the settlement confidential, such a provision is unenforceable if the employee publicly reveals details of the claim that identify the employer.

· Employers cannot retaliate against an employee for refusing to sign an employment-related contract containing a waiver or nondisclosure provision relating to discrimination, retaliation or harassment.

· If an employer attempts to enforce a nondisclosure agreement or a waiver of rights or remedies, it may be liable for the employee’s attorneys’ fees and costs.

· Employees may file suit in New Jersey state court and attempt to recover common law remedies, as well as attorneys’ fees.

· Employee claims have a 2-year statute of limitations and employees still may have other statutory or common law remedies.


But the ban does not apply to employer non-compete, non-solicit, non-disclosure and confidentiality agreements, or to collective bargaining agreements between an employer and the employees’ representative (that is, agreements involving unions).


What does this mean for New Jersey employers? Practically speaking, they must make sure that any settlement agreements resolving claims of discrimination, harassment or retaliation include the required disclaimer against confidentiality. Employers should exercise caution when implementing and enforcing any confidentiality with respect to an employee settlement agreement resolving NJLAD claims.


Given the bill’s broad application, employers are advised to review their employment contracts, onboarding documents and settlement/separation agreements to ensure they are in compliance with the new legislation moving forward.


If you are an employer who is concerned about compliance to this new law, or an employee impacted by discrimination, retaliation or harassment in the workplace, we are here to provide advice and counsel. Call 973-509-8500 x213 or email us at LFarber@LFarberLaw.com.

The contents of this writing are intended for general information purposes only and should not be construed as legal advice or opinion in any specific facts or circumstances

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