Arbitration in New Jersey Law Against Discrimination Claims

There has been much debate in New Jersey on whether arbitration agreements are enforceable in discrimination, harassment and retaliation claims brought under the New Jersey Law Against Discrimination (NJLAD). The New Jersey District Court settled this matter in N.J. Civil Justice Institute v. Grewal in March 2021.

Employers frequently require employees to sign an arbitration agreement at the start of their employment. An arbitration agreement waives an employee’s right to litigate claims against his or her employer in court. Instead, the claims would be heard in an arbitration, which is a less formal dispute resolution process.

Employers favor arbitration over the court for several reasons that are detrimental to the interests of employees. First, arbitration is done in private so the employer avoids the negative publicity that may result from a public court case. Second, arbitration limits the employee’s right to discovery, which is the right to obtain all information relevant to the claim. Third, an employee may have perhaps one arbitration in his or her lifetime while a large company will have many. Since the arbitrator is selected and paid by the parties there is a belief that arbitrators favor employers to obtain repeat business. Fourth, an arbitration decision is final and there is no right to appeal.

In March 2021, the New Jersey District Court ruled in N.J. Civil Justice Institute v. Grewal, that the Federal Arbitration Act (FAA) overrides the NJLAD’s ban on arbitration clauses. Therefore, arbitration clauses are permissible for claims brought under the NJLAD.

Consequently, the NJLAD does not provide employees with a defense against enforcing arbitration clauses for their claims related to discrimination. However, there are other flaws that could make an arbitration agreement unenforceable. For example, confusing or vague wording could make an arbitration agreement unenforceable. If you believe you have a claim against your employer, but may be subject to an arbitration agreement, it is a good idea to contact a lawyer to determine whether you may be able to bring your claim in court.