By: Ty Hyderally, Esq. and Francine Foner, Esq.

As discussed in an earlier blog, Governor Philip D. Murphy signed into law Bill S-121 on March 18, 2019. The law was intended to benefit New Jersey employees by, among other things, amending the New Jersey Law Against Discrimination, N.J.S.A. §10:5-1 et seq. (“NJLAD”), to prohibit employers from requiring their employees to prospectively waive statutory rights and remedies for claims of discrimination, retaliation or harassment. N.J.S.A. 10:5-12.7 (“Section 12.7”). (https://www.employmentlit.com/2019/03/22/strike-three-for-waivers-in-new-jersey). Under the NJLAD, employees have the right to a jury trial, as opposed to arbitrating claims arising under the NJLAD.  However, if an employee signs an arbitration agreement with an employer, it can, in many situations, preclude the employee from having access to the Courts.  The passage of Section 12.7 seeks to remedy this situation.

However, the implementation of Section 12.7 has been stalled by the successful arguments of New Jersey business groups that the Federal Arbitration Act (FAA) pre-empts New Jersey’s state law prohibiting arbitration of discrimination claims.  On February 15, 2022, the New Jersey Appellate Division found that since the FAA provides that agreements requiring arbitration of controversies are generally enforceable, the FAA conflicts with New Jersey’s state law prohibiting arbitration of discrimination claims under the NJLAD. Antonucci v. Curvature Newco, Inc., 470 N.J. Super. 553, 564-65 (App. Div. 2022) (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 341 (2011); Preston v. Ferrer, 552 U.S. 346, 353 (2008)).  The Antonucci Court held that because there is a conflict between the NJLAD and FAA, the federal law controls, under the Supremacy Cause of the United States Constitution.  Id.  New Jersey employers were therefore permitted to require employees to sign agreements mandating arbitration of claims arising under the NJLAD, despite Section 12.7’s prohibition against forced arbitration of such claims.

However, on March 3, 2022, President Joe Biden signed into law HR 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (“EFFA”). That law amends the FAA to prohibit forced arbitration of claims of sexual assault and sexual harassment. Therefore, the road was paved to argue that, as to sexual assault and sexual harassment claims, the FAA no longer conflicts with the NJLAD’s prohibition against employers requiring arbitration of such claims.  Out of this reality came Zuluaga v. Altice United States, 2022 N.J. Super. Unpub. LEXIS 2356 (Nov. 29, 2022).

Laura Zuluaga (“Zuluaga”) worked for Altice U.S. (“Altice”) as a sales representative beginning in December 2020. In connection with her employment, Zuluaga signed Altice’s agreement to arbitrate any “disputes, claims, complaints, or controversies arising out of and/or directly or indirectly relating to the relationship between [plaintiff] and the Company.” Id. at *2.

In October 2021, Zuluaga sued Altice and two of her supervisors, Mitch Nyamwange (“Nyamwange”), and Clifford Pierce (“Pierce”) (“Defendants”). Zuluaga alleged that Altice fostered and condoned a sexually hostile work environment which Nyamwange and Pierce aided and abetted.  Zuluaga also argued that Altice constructively discharged her in violation of the NJLAD.

Defendants moved to dismiss the complaint and to compel arbitration, based on the agreement to arbitrate disputes. Plaintiff opposed the motion, arguing that the arbitration agreement failed to clearly and unambiguously provide notice that she was waiving her constitutional and statutory rights and was therefore invalid.

On March 4, 2022, the trial judge granted defendants’ motion dismissing plaintiff’s complaint with prejudice and ordering the parties to arbitration.  The trial court did not consider the issue of whether the FAA continued to pre-empt Section 12.7 of the NJLAD following the enactment of the EFFA. Zuluaga appealed this decision, arguing, among other things, that the EFFA eliminated any conflict between the FAA and Section 12.7 of the NJLAD, and therefore Zuluaga should be permitted to try her case before a jury.  The Appellate Division agreed that passage of the EFFA eliminated the conflict between the FAA and Section 12.7 as to sexual harassment claims.  However, the Court ruled that it did not apply to Zuluaga’s claims of sexual harassment, because her claims arose after the March 3, 2022, effective date of the EFFA.   Despite the unfortunate end result for Zuluaga, the case makes clear that at least for sexual harassment claims arising under the NJLAD, New Jersey employers are no longer able to compel employees to “agree” to arbitrate those claims. Zuluaga v. Altice United States, 2022 N.J. Super. Unpub. LEXIS 2356 (Nov. 29, 2022).   Thus, those individuals may not be compelled to waive their statutory right to a jury trial of sexual harassment claims arising under the NJLAD, when those claims arise after March 3, 2022.

As to other types of discrimination claims under the NJLAD, federal legislation further amending the FAA, to exclude other types of employment claims from forced arbitration, may be on the horizon. As Vice President Kamala Harris remarked at the signing into law of the EFFA, “our administration will work with Congress on broader forced arbitration legislation… [a]nd we will … also protect the rights of workers in cases of wage theft, racial discrimination, and unfair labor practices.”

It remains to be seen how broad any future amendments to the FAA will be. However, ending forced arbitration of sexual harassment and sexual assault claims is a great start.

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