A Capehart Scatchard Blog

“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.



About the Author

About the Author:

Carmen Saginario Jr., Esq. is Co-Chair of Capehart Scatchard’s Labor & Employment Group. Mr. Saginario focuses his practice on employment litigation and counseling. He regularly counsels clients on litigation avoidance, personnel policies and procedures including those associated with the Americans with Disabilities Act, Family and Medical Leave Act and Fair Labor Standards Act, employment discipline, layoffs and other terminations. Mr. Saginario directs and participates in internal investigations involving claims of harassment, policy violations, ethics and other employment issues. He also appears on behalf of private and public sector clients before the judiciary as well as State and Federal administrative agencies (EEOC, N.J. Division on Civil Rights, etc.). Mr. Saginario is also experienced in representing clients before arbitrators and mediators. He has negotiated numerous public collective negotiations agreements (e.g., law enforcement, public works, etc.). Mr. Saginario has been certified by the National Football League Players Association (NFLPA) as a Contract Advisor (player agent).

Mr. Saginario also regularly represents clients in administrative and complex civil litigation matters and also supervises Capehart Scatchard’s Corporate Compliance Group which counsels and assists public and private sector entities on establishing and implementing legal and ethics compliance programs.

Mr. Saginario serves as counsel for governmental and other entities (including counties, municipalities, school boards, and fire districts) and individuals with respect to laws governing public entities, as well as educational, procurement, environmental, transportation, and public safety issues.

Mr. Saginario served as a Deputy Attorney General for the State of New Jersey and Assistant Counsel to Governor Thomas H. Kean, has served as Vice Chair and Director of Administration for the Cinnaminson Sewerage Authority, and Vice Chair and Treasurer of the New Jersey Health Care Facilities Financing Authority.


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