New Jersey Strikes Down NDAs!!!

March 19, 2019

By Jennifer Vorih, Esq. and Ty Hyderally, Esq.

This Monday, March 18, 2019, New Jersey Governor Philip Murphy signed into law Bill S-121 (the “Act”), which will positively impact New Jersey employees significantly by banning non-disclosure requirements in agreements settling claims of discrimination, retaliation or harassment.

The NJLAD protects employees from discrimination and sexual harassment. When a case settles out of court, the employer often requires the employee to sign a non-disclosure, or confidentiality agreement. The employee then is prohibited from discussing the settlement, and usually all of their allegations against the employer, as well. The terms of NDAs vary, but under many such agreements, if the employee discusses the agreement or their allegations, the employee must forfeit the full amount of the settlement, and possibly pay damages, including the employer’s legal fees.

New Jersey’s new ban of non-disclosure agreements, consistent with the “MeToo” movement, deems unenforceable — against an employee — any non-disclosure provisions in any employment contract or settlement agreement relating to a claim of discrimination, retaliation or harassment, if those NDAs “have the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.” The Act further provides that such NDAs are against public policy.

However, the provision is drafted to require an employer to keep to keep the details confidential if the employee wants them to. Nonetheless, “[i]f the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable, then the non-disclosure provision shall also be unenforceable against the employer.” To that end, the law further requires, “[e]very settlement agreement resolving a discrimination, retaliation, or harassment claim by an employee against an employer [to] include a bold, prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”

The Act applies to rights and remedies for claims of discrimination, retaliation or harassment “under the NJLAD, or any other statute or case law.” (emphasis added). Thus, an employer cannot force an employee to keep silent about her allegations or the settlement of her claims of, for example, retaliation for whistleblowing under the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 et seq. (“CEPA”).

Further, the Act provides a separate cause of action for an employee who is retaliated against for refusing to enter into any settlement agreement which requires a non-disclosure provision which is enforceable against the employee, relating to a claim of discrimination, retaliation, or harassment. Further, a prevailing plaintiff who brings such a claim shall be awarded reasonable attorney fees and costs.

If an employer tries to enforce such a non-disclosure agreement or retaliates against you for opposing such an NDA, you could have substantial rights and remedies under this new law.  Such retaliation by the employer could support a legal violation that could lead to money damages and the employer’s payment of the employee’s reasonable attorney’s fees and costs.

The Act states that it takes effect immediately and applies to all contracts and agreements entered into, renewed, modified, or amended on or after the effective date. Thus, employment contracts and agreements entered into prior to the effective date would not be impacted, unless they are renewed, modified or amended thereafter.

This blog is for informational purposes only.  It does not constitute legal advice, and may not reasonably be relied upon as such.  If you face a legal issue, you should consult a qualified attorney for independent legal advice with regard to your particular set of facts.  This blog may constitute attorney advertising.  This blog is not intended to communicate with anyone in a state or other jurisdiction where such a blog may fail to comply with all laws and ethical rules of that state of jurisdiction.