New Jersey’s Bill S121 Prohibits Non-Disclosures for Certain Employment Claims

New Jersey Governor Phil Murphy has signed Bill S121 into a law, which prohibits employers to require employees to sign and honor non-disclosure agreements and settlement details in discriminationsexual harassment, or retaliation claims. In our current climate of transparency with the #MeToo movement, Bill S121 allows victims to speak out against those responsible.

New Jersey has now joined New York and California in banning non-disclosure agreements and gag orders on terms of settlements in sexual harassment and unlawful discrimination cases that are protected under the New Jersey Law Against Discrimination (NJLAD). Areas protected by the NJLAD include discrimination based on race, religion, age, sexual preference and gender identification, pregnancy, marital status, and nationality. The law also protects employees from retaliation for reporting illegal and unethical discriminatory actions or harassment in the workplace.

Moving Forward with Transparency

Recent lawsuits involving celebrities, prominent journalists, and high-level executives accused of sexual discrimination, harassment, and indecent behavior have had a powerful effect on the protection of workers. New Jersey’s new law will ensure that victims have the choice of making the details of their case public or kept private.

The law will make future non-disclosure agreements non-enforceable, including lawsuits that have been moved to arbitration. In the past, non-disclosure agreements protected employers from harmful publicity for unlawful practices, such as sexual harassment and sexual assault.  New Jersey, New York, and California are leading the way in taking a strong stance against these actions.

Penalties for Non-Compliance with Bill S121

Penalties for non-compliance with Bill S121 are strong and meant to enforce the stipulations included in the law. Violators that require non-disclosure agreements as a term of employment or that place a gag order on a victim concerning matters relating to the judgment or settlement terms of a discrimination or harassment claim risk stiff fines and possible lawsuits. Violators that retaliate against an employee that reports unlawful actions can face employment discrimination lawsuits. Violators will also be responsible for lawyer fees and court costs of the plaintiff.

Non-Disclosure Agreements to Protect Proprietary Information

While some claim that the language of Bill S121 is ambiguous, it clearly states that employers maintain the right to require non-disclosure agreements that protect proprietary information, such as trade secrets and client information. Employee contracts and executive agreements can still include this type of non-disclosure agreement and enforce those that protect a company’s confidential information.

As companies work to become compliant with the new mandates, corporate executives and employers need to review their current employment contracts and policies to ensure they are within the parameters set by the new law.  Consulting with an experienced employment lawyer can ensure that employees fully understand their legal rights, and that employers follow the new law.