NJ Senate Passes Bill to Ban Employment Non-Disclosure Agreements

The #MeToo movement sparked in the wake of the Harvey Weinstein sexual assault allegations has led policymakers to reconsider the propriety of non-disclosure agreements (NDAs) in employment contracts. Many employers seek NDAs as a condition of settling sexual harassment and other employment discrimination cases. But critics charge such agreements only serve to silence victims and protect companies from public scrutiny of their employment practices.

Earlier this year, New York State legislators adopted new restrictions on the use of NDAs in sexual harassment settlements. But New Jersey legislators may go a step further. On June 11, 2018, the New Jersey Senate passed S-121 by a vote of 34 to 1. The bill, sponsored by state senators Loretta Weinberg, Nia Gill, and Teresa M. Ruiz, would cover not just NDAs arising from sexual harassment allegations, but essentially any employment contract that purports to waive an employee's rights under state employment discrimination laws.

Specifically, S-121 states that any “provision in an employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable.” This would apply to any claims under the New Jersey Law Against Discrimination as well as “any other statute.” It would not, however, alter or affect the terms of any employee or employer covered by a collective bargaining agreement.

S-121 would further prohibit any non-disclosure provision in an “employment contract or settlement agreement” that is designed to conceal the details “relating to a claim of discrimination, retaliation, or harassment.” Such NDAs would no longer be enforceable against a current or former employee.

If an employer attempts to enforce an NDA in violation of the bill's terms, the employee would have the right to file a civil suit in New Jersey Superior Court. If the Court rules in the employee's favor, is the employee would be entitled to recover “reasonable attorney fees and costs.”

S-121 must still pass the state Assembly and be signed into law by Gov. Phil Murphy before taking effect. Under the present terms of the bill, S-121 would take effect immediately upon the Governor's signature. Although it would not apply retroactively, it would apply to any existing employment contracts or settlement agreements “entered into, renewed, modified, or amended on or after the effective date.”

If you have any questions or concerns about how S-121 and related legislation may affect your rights and/or obligations, please contact one of our Labor & Employment attorneys or call 732.545.4717 today.