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Assembly Bill No. 4521: Savage decision regarding Non-Disparagement Clauses Prompts New Legislation

By: Cristina N. Hyde, JD

Last May, in the case of Savage v. Township of Neptune, the New Jersey Appellate Division determined that a 2019 amendment to the New Jersey Law Against Discrimination (NJLAD), prohibiting non-disclosure or confidentiality provisions in employment contracts and settlement agreements, did not extend to the inclusion of non-disparagement clauses.

Four months later, Assembly Bill No. 4521 (A4521) was introduced to close the loophole exposed by the Savage decision.  Even though non-disparagement clauses are commonly recognized by employers as an instrument to protect the value of a business’ reputation and goodwill, A4521 reinforces the intent of the existing law to prevent the inclusion of provisions in employment agreements that would have a chilling effect on pursuing claims of discrimination, retaliation, or harassment.

Specifically, the proposed legislation will clarify that:

A provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment, including, but not limited to, a non-disclosure or non-disparagement provision, or other similar agreement, shall be deemed against public policy and unenforceable.

If enacted, the bill will take effect immediately, and apply to all agreements drafted, renewed, modified, or amended after the effective date.

Campanella Law Office will be carefully monitoring A4521 as it progresses through the New Jersey Legislative process.  However, in anticipation of its enactment, if your business has any questions or concerns about existing employment agreements and how they might be affected, Contact Us.

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