In 2019, New Jersey amended its Law Against Discrimination (NJLAD) to include a provision purporting to ban agreements requiring employees to arbitrate claims arising under the NJLAD (Amendment). On February 15, 2022, a New Jersey state appellate court held that the Federal Arbitration Act (FAA) preempts the Amendment when it comes to arbitration agreements governed by the FAA. This is the second court to blunt the impact of the Amendment, making it even more likely that arbitration agreements will survive as applied to NJLAD claims.
The case on appeal, Antonacci v. Curvature Newco, Inc., involved an employee’s suit against his former employer alleging unlawful termination under the NJLAD. The employer moved to dismiss the complaint and compel arbitration on the basis of an arbitration agreement, stating that all disputes between the employer and employee would be resolved by arbitration. The trial court found that the agreement was valid and enforceable, but did not address whether the NJLAD Amendment was pre-empted by the FAA.
On appeal, the employee argued that the trial court erred by ruling implicitly that the FAA preempted the Amendment. Yet the appellate court, relying on U.S. Supreme Court precedent, affirmed the trial court’s decision, and held that to the extent the NJLAD Amendment would preclude arbitration, it is preempted when applied to an arbitration agreement governed by the FAA. The court noted, however, that certain provisions of an arbitration agreement – such as one that shortens the time in which an employee may bring a claim – may not be preempted.
As we previously reported, in March 2021, a federal court in the District of New Jersey tackled the same issue and reached the same conclusion regarding FAA preemption. The takeaway is that, for the moment, NJ state and federal courts appear aligned and prepared to enforce arbitration agreements, even as they relate to NJLAD claims.
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