“Gag Orders” in Harassment/Discrimination Claims Unenforceable
By: Carmen Saginario Jr., Esq.
Contribution: Nicole Crincoli, Law Clerk
Employers are well aware that state and federal laws prohibit discrimination and harassment in the workplace, and that many settlements of these claims provide for a non-disclosure agreement (“NDA”). As of March 18, 2019, a new “twist” to New Jersey law prohibits employers from requiring employees to remain silent when they enter into an employment agreement or settle a harassment, discrimination, or retaliation claim.
What Does the Law Say? The new law provides that “non-disclosure agreements” (i.e., prohibiting disclosure by employees of claims of harassment, discrimination, or retaliation) are not enforceable against the employee as “against public policy.” The new law also provides that provisions in an employment contract that waive any substantive or procedural right or remedy relating to any of these claims are also deemed against public policy and unenforceable against the employee. Note that if the employee publicly reveals sufficient details so that the employer is reasonably identifiable, then the non-disclosure provision will also be unenforceable against the employer.
Who Does the Law Apply to? The law applies to current or former employees who are parties to an employment contract or settlement. While the law also applies to claims that have been submitted to arbitration, it does not apply to the terms of any collective bargaining agreement between an employer and the representative(s) of the employees.
Are Employers Prohibited from Entering Into NDAs? The short answer is “No.” Employers may still want to enter into non-disclosure agreements with employees. However, these agreements cannot be created to silence employees who have been the victims of (or claimed) harassment, discrimination, or retaliation. The new law also does not prohibit an employer from requiring an employee to sign an agreement requiring the employee not to compete with the employer during or after employment and not to disclose proprietary employer information such as non-public trade secrets, business plans, and customer information.
Can an NDA That Has Already Been Agreed Upon Be Enforced? Be careful on this one. While the law specifically says that its provisions only apply to “all contracts and agreements entered into, renewed, modified, or amended on or after the effective date” (March 18, 2019), skillful employee advocates will likely argue that even “pre-existing agreements” are against public policy and should not be enforced. Also note that this law provides that a person who enforces or attempts to enforce a provision “deemed against public policy and unenforceable” under the law may be liable for the employee’s reasonable attorney fees and costs.
What’s the Take-a-Way? As a threshold matter, employers should have policies and procedures in place aimed at the prevention of harassment and discrimination in the workplace. As for this law, employers are cautioned to act cautiously and to seek advice from their labor and employment professionals before entering into a non-disclosure agreement with an employee, especially if there have been any claims of harassment, discrimination, or retaliation.
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