A bill in the New Jersey State Senate would effectively prohibit jury waivers, arbitration clauses, and non-disclosure provisions related to claims under the New Jersey Law Against Discrimination, N.J.S.A. § 10:5-1, et seq. (LAD).

S-3581, introduced in the Senate on December 4, 2017, declares, in no uncertain terms, that provisions in an employment contract that waive “any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment” are contrary to public policy and would be unenforceable. Furthermore, S-3581 would prohibit any prospective waiver of rights or remedies (e.g., a jury trial) under the LAD. If passed, the enforceability of arbitration clauses with respect to LAD claims would be questionable.

S-3581 also contains a #MeToo provision designed to eliminate non-disclosure provisions in agreements resolving claims under the LAD. It provides as follows:

A provision in any employment contract or agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable.

Clearly, an employer that seeks to resolve a claim under the LAD would be unable to enforce any confidentiality or non-disclosure provisions in settlement agreements whether as part of a litigation or pre-suit negotiation.

Additional protections are provided to individuals who refuse to enter into an agreement with provisions contrary to the legislation. The bill prohibits an employer from taking retaliatory action (e.g., refusal to hire, discharge, suspension, demotion, and so on) on the grounds that an individual refuses to enter into an agreement with terms contrary to S-3581.

Lastly, to the extent an employer seeks to enforce an agreement contrary to the bill, the employee may collect costs and reasonable attorney’s fees for defending against any such suit.

The bill would affect agreements prospectively. It expressly does not apply to the terms of collective bargaining agreements.

If passed, S-3581 likely would drastically affect LAD litigation and strategy. The inability of an employer to utilize arbitration procedures or insist upon confidentiality in settlement agreements may result in fewer out-of-court resolutions and more protracted and costly litigation.