In a significant opinion affecting employers, the New Jersey Supreme Court has placed strict limits on the scope of “nondisparagement” clauses in settlement agreements that impact the ability of victims of harassment, discrimination, and/or retaliation under New Jersey’s Law Against Discrimination (LAD) to discuss the underlying conduct.

The key takeaway? The court ruled, in a unanimous opinion issued May 7, 2024, that the LAD is clear that a settlement agreement cannot prevent a plaintiff from discussing the “details relating to a claim of discrimination, retaliation, or harassment,” and that remains true when the details of such a claim would disparage an employer.

The History

Here’s the background. In 2021, in the wake of the #MeToo movement, the New Jersey Legislature amended the LAD to allow a plaintiff to discuss the details of their harassment, discrimination, and/or retaliation even after signing a settlement agreement. In particular, N.J.S.A. 10:5-12.8(a) provides in relevant part that “[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 (hereinafter referred to as a ‘non-disclosure provision’) shall be deemed against public policy and unenforceable...” This right cannot be waived by agreement in a settlement agreement.

The plaintiff in this case, Savage v. Township of Neptune et al., sued her employer and others for sexual harassment, sex discrimination, and retaliation, all in violation of the LAD, and the parties settled her lawsuit in 2014. The same plaintiff sued her employer again two years later in 2016 alleging that the same defendants violated the settlement agreement and were continuing to engage in sex discrimination, harassment, and retaliation against her. The parties then settled her second lawsuit in July 2020. The plaintiff then, one month later, gave an interview with a local news channel where she discussed in detail the bases for her claims of harassment and retaliation. The plaintiff also stated her belief that other women would likely face similar challenges in the same workplace in the future. Her employer sued her for violating the nondisparagement clause of the settlement agreement by discussing the details of her claims of harassment and retaliation.

The trial court concluded that Section 12.8 of the LAD only references “non-disclosure” provisions, but is silent as to nondisparagement and therefore, the nondisparagement provision should be enforced against the plaintiff. The Appellate Division likewise concluded that the nondisparagement provision was enforceable but disagreed that it had been violated by the plaintiff’s statements.

The Supreme Court Decision

The New Jersey Supreme Court disagreed with both lower courts, finding that the nondisparagement clause that the plaintiff and her employer had agreed to was far too broad to be enforced because it ran afoul of N.J.S.A. 10:5-12.8(a). The court explained that while the statute uses the term “non-disclosure provision,” it cannot be construed so narrowly as to allow an employer to avoid this requirement by imposing a broad nondisparagement provision. The court held that the LAD is clear that a settlement agreement cannot prevent a plaintiff from discussing the “details relating to a claim of discrimination, retaliation, or harassment,” and that remains true when the details of such a claim would disparage an employer. A nondisparagement clause can prevent disparaging statements on topics that are not related to the claims of harassment, retaliation, and discrimination; but a clause that would prevent a plaintiff from speaking out on these topics will be voided as against the public policy of New Jersey. The court also held that language of the amendments was so broad that it would cover not just past and present claims against the employer, but future ones as well. For that reason, this plaintiff was permitted to make forward-looking statements that it was likely that discrimination, retaliation and harassment would continue at her workplace.

Now What?

This is a significant opinion that employers must heed. The Supreme Court has sent clear instructions to courts in New Jersey to limit the scope of nondisparagement clauses in settlement agreements. Employers should review their existing agreements, including separation agreements, to ensure that a nondisparagement clause does not have a purpose or effect that is barred by the LAD.

[View source.]