Even though non-disparagement clauses have been commonly recognized by employers as an instrument to protect the value of a business’ reputation and goodwill, S1688 reinforces the decision in Savage to render these provisions unenforceable due to the chilling effect on pursuing claims of discrimination, retaliation, or harassment.

The proposed legislation seeks to ensure that no rights or remedies under the New Jersey Law Against Discrimination can be prospectively waived, stating:

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.

The new legislation also extends the applicability of the prohibition to the terms of any collective bargaining agreement between an employer and the collective bargaining representative of the employees.

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

Campanella Law Office will be carefully monitoring S1688 as it progresses through the New Jersey legislative process. However, in anticipation of its enactment, if your business has not already reviewed its employment agreements in response to the Savage decision, it should be a priority to do so.

(This blog, prepared by Campanella Law Office, is for general informational purposes only and is not intended to convey specific legal advice, nor is it intended to create or constitute an attorney-client relationship.)

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With the recent enactment of the Speak Out Act, (Pub.L. 117-224) all employers should be aware that the use of nondisclosure or nondisparagement agreements (NDAs) to silence the victims of workplace sexual harassment and sexual assault has been limited. Drafted to combat inappropriate conduct in the workplace, the Speak Out Act prohibits the judicial enforceability of pre-dispute NDAs.

Findings underpinning the new law state that eighty-one percent of women and forty-three percent of men have experienced some form of harassment in their lifetime.  Statistics also suggest that an estimated eighty-seven to ninety-four percent of victims never file a formal complaint.  Therefore, acknowledging a need to support those willing to disclose abuse, the Speak Out Act states:

With respect to a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law. Ibid. §4(a).

Supporters of the law, including its sponsor, U.S. Senator Kirsten Gillibrand, believe that this legislation is a step towards fixing a broken system that protects perpetrators, while silencing victims and often forcing survivors out of the workplace and preventing opportunities for advancement. Instead, the Act is meant to empower survivors to speak out without fear of legal retaliation; encouraging transparency that will make for a safer and more productive workplace.

Of course, the Speak Out Act does contain exceptions including a specific clarification that it does not prohibit an employer from protecting trade secrets and proprietary information. In addition, the new law is not applicable to the use of NDAs in connection with the settlement of claims or disputes relating to sexual assault or harassment.

The Speak Out Act is also meant to set a threshold upon which state governments are permitted to build. Therefore, states are free to enact additional protections restricting NDA enforceability and some states, like New Jersey, are already in the process of doing so (our post on A4521, can be found here).

The Act is applicable to all claims filed on or after December 7, 2022.  Therefore, employers should review existing nondisclosure and nondisparagement agreements for enforceability and be conscious of the new parameters set by the Speak Out Act when drafting new employment agreements.

If you have any questions on how the Speak Out Act will affect your business or would like help updating your policies, employee handbooks, or employment contracts,  Campanella Law Office can help.

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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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