New Jersey Employers Beware – Parts of Your Employment Agreements May Now Be Unenforceable
New Jersey (March 21, 2019) - As of March 18, 2019, New Jersey employers may not include any provision in an employment contract that waives any substantive or procedural rights or remedies that relate to a claim of discrimination, retaliation or harassment. Any such provision is deemed unenforceable and against public policy. Further, employers are prevented from requiring employees to waive any rights or remedies afforded by the New Jersey Law Against Discrimination or any other statute or case law.
Additionally, the new law provides that a non-disclosure provision, which is intended to conceal the details relating to a claim of discrimination, retaliation or harassment, in any employment contract or settlement agreement is deemed against public policy and unenforceable against a current or former employee who is a party to the contract or settlement. To that end, the law requires that every settlement agreement that is utilized to resolve a claim of discrimination, retaliation or harassment must include a bold and prominently placed notice stating that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision is unenforceable against the employer if the employee publicly reveals sufficient details of the claim such that the employer is reasonably identifiable.
Significantly, the law further provides that any person who enforces, or attempts to enforce such a provision is liable for the employee’s reasonable attorneys’ fees and costs. Additionally, the law prohibits any retaliatory action, including, but not limited to, the failure to hire, discharge, suspension or demotion, if the person does not enter into any agreement that contains a provision that is deemed unenforceable and against public policy. In that regard, a person alleging a violation of the law may file an action in the New Jersey Superior Court and, if successful, the person is entitled to an award of attorneys’ fees and costs, in addition to other remedies available in common law tort actions.
The new law does not prohibit an employer from entering into a non-competition agreement with employees. Further, it does not prohibit agreements by which an employee agrees not to disclose an employer’s proprietary information, including non-public trade secrets, business plans or costumer information.
As a result of this new law, employers with operations and employees in New Jersey should review their employment contracts and settlement agreements to ensure compliance with the requirements of the law. Significantly, employers must understand that they can no longer prohibit employees from disclosing information pertaining to claims of discrimination, retaliation or harassment.
Further, employers should be aware that the prohibition of employment contract provisions that waive any substantive or procedural rights or remedies relating to claims of discrimination, retaliation or harassment, arguably also prohibits mandatory arbitration clauses, along with waivers of the right to a jury trial. Additionally, any provision that attempts to limit an employee’s potential recovery in an action seeking damages for discrimination, retaliation or harassment is also prohibited.
There is a serious questions whether a bar on arbitration agreements will be enforceable given the strong pro-arbitration provisions of the Federal Arbitration Act as construed by the courts. We can expect judicial guidance as to that issue before too long, so it may be premature for New Jersey employers to entirely abandon arbitration agreements.
Any employer who violates the provisions of this new law could be exposed to significant expenses, including attorneys’ fees and costs. As a result, employers should consult with counsel when reviewing their employment documents to ensure compliance with the law.
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John M. Borelli, Associate