New Jersey Governor Limits Employment Nondisclosure Agreements

This week, New Jersey enacted a law to further protect employee rights. Ordinarily, if a nondisclosure agreement’s terms are violated, the harmed party (whose contractually-protected private information was revealed) could sue the disclosing party for injunctive and monetary relief.

However, on Monday March 18, 2019, New Jersey Governor Phil Murphy signed a bill limiting the use of nondisclosure agreements in employment contracts and settlement agreements. The bill became immediately-effective law. Cases involving discrimination, retaliation, or harassment (including sexual assault and sexual harassment) fall under the new law’s restrictions.

Perhaps in response to the nation’s #MeToo movement, the new law forbids employment contracts from waiving potential victims’ rights: an employer can no longer permissibly create a contract requiring an employee to remain silent about discrimination, retaliation, or harassment claims.

As of March 18, 2019, a settlement agreement resolving such claims must include a “bold, prominently placed notice” explaining 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.”

Furthermore, an employer can no longer create a contract that waives an employee’s procedural due process rights. Arbitration agreements and jury trial waivers involving such claims have become essentially impermissible.

Employees should look for language in these agreements to the contrary, as New Jersey has taken a substantial step to protect its employees’ workplace rights.