Alert: On March 18, 2019, Governor Murphy signed into law Senate Bill No. 121, which will dramatically and prospectively alter the landscape on arbitration and settlements of claims based on discrimination, retaliation and harassment. The law takes effect immediately. Specifically, the new law provides:
- Non-disclosure provisions in settlement agreements of claims of discrimination, retaliation or harassment are unenforceable. A provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment is against public policy and is unenforceable against an employee who is a party to such agreement. If the employee publicly reveals sufficient details of the claim so that employer is reasonably identifiable, then the provision is also unenforceable. In short, an employee can demand confidentiality. But an employer cannot. Regardless, it’s now against public policy.
- Provisions in employment contracts (excluding Collective Bargaining Agreements) that waive rights or remedies under the Law Against Discrimination or any other statute or case law are unenforceable as against public policy. Policies or agreements that provide for jury waivers, class action waivers and mandatory arbitration provisions relating to discrimination, retaliation and harassment, thus, are no longer enforceable as a matter of public policy in employment contracts.
- New notice requirement requires a prominently placed, bolded notice in settlement agreements resolving discrimination, retaliation, or harassment claims by an employee against an employer stating that although the parties may have agreed to keep settlement and underlying facts of such claims confidential, such a non-disclosure provision in an agreement is unenforceable.
- No prohibition on employees and employers entering into non-competes applying during or after employment or an agreement that the employee not release the employer’s proprietary information.
- Plaintiffs who prevail on claims for violations of this law can collect attorneys’ fees and costs from the other party. A party who attempts to enforce a provision deemed against public policy and unenforceable will be liable for the employees’ attorneys’ fees and costs.
- Two-year statute of limitations on pursuing an action for violation of this law, with all common law tort remedies available.
Policies requiring arbitration or jury waivers and the like will need to be amended going forward in order to comply with the new law. While the underlying motivation is to ensure openness in the wake of “me too” harassment claims, the new law is far more expansive and applies to all facets of discrimination, retaliation and harassment for protected categories (sex, age, race, etc.).