New Jersey lawmakers have introduced a bill that will prohibit an employer from requiring that victims of discrimination, retaliation and harassment to keep their claims confidential as part of a settlement. Employers routinely require that non-disclosure provisions are included as a material term of any settlement agreement in cases of sexual harassment and other employment discrimination. Bill No. 121, if passed, will render any confidentiality provision contained in a settlement agreement as unenforceable.
Earlier this year, the federal government passed the Tax Cuts and Jobs Acts (“TCJA”). In an apparent response to the #MeToo movement, the TCJA included a provision that prohibits employers from taking a deduction for attorney fees’ and costs that are incurred in any sexual harassment or sexual abuse case if the settlement agreement includes a non-disclosure provision. While this provision was clearly aimed at curbing the use of the non-disclosure provisions in sexual harassment lawsuits, it did not prohibit the use of non-disclosure provisions all together. Under TCJA, an employer can still require a victim of sexual harassment or abuse to keep any settlement of his or her claim confidential if they are willing to forgo the tax deduction.
Bill No. 121 takes it much further by making any confidentiality provision in any settlement agreement that attempts to conceal discrimination, retaliation, or sexual harassment, null and void. Under the bill, an employer must include a prominent notice that the clause is unenforceable if they choose to add it to any settlement agreement. The bill also prohibits an employer from taking any retaliatory action against an employee who refuses to sign an employment agreement that contains any illegal non-disclosure clause.
Bill No. 121 also specifically makes any provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment as unenforceable. The significance of this provision is that employers would no longer be able to require an employee to litigate his or her employment discrimination claims in mandatory arbitration. This is becauseemployees have the constitutional right to litigate their employment claims in a court of law and the right of a jury trial.
Proponents of Bill No. 121 argue victims of sexual harassment and other employment discrimination should not be silenced as part of the resolution his or her sexual harassment claim. The overarching goal of New Jersey’s discrimination law is to eradicate sexual harassment and all other forms of employment discrimination. By requiring victims of discrimination to keep their experiences silent as a material term of the legal resolution could allow the harasser to commit future abuses. They also argue that undermining a victims ability to share their experiences can negatively impact their ability to recover from the discriminatory conduct and undercut the purposes of New Jersey discrimination laws and its remedial goals.
Those against the proposed legislature point out that many victims of discrimination, retaliation and harassment prefer their experiences to be confidential and that requiring all persons to keep it confidential takes away from persons right to contract freely. They argue that by requiring all settlement agreements in these cases to not be confidential could discourage victims from litigating their claims and would encourage employers to not settle by taking away their ability to require confidentiality as a material term of a settlement.
Our New Jersey sexual harassment lawyers will continue to keep an eye on whether Bill No. 121 becomes law. The Bill No. 121 was passed nearly unanimously in the New Jersey Senate on June 7th, 2018 and is supplemental to New Jersey’s Title 10. The proposed has now been introduced into the Assembly to be discussed and eventually voted on. If passed, the bill will take effect immediately. The bill would not be retroactive, and as it is currently written, would not apply to collective bargaining agreements.