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What New Jersey’s New Law On Employment Contracts Means for Employers: Are Non-Disclosure and Arbitration Provisions Out?

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March 20, 2019
Adam E. Gersh
Cherry Hill, NJ

On March 18, 2019, New Jersey Governor Phil Murphy signed a new law, which, among other things, bars employers from requiring employees to sign or enforcing employment contracts that require employees to agree to waive certain rights or remedies and bars agreements that conceal details relating to discrimination claims. 

Here’s what employers need to know:

Although the law is aimed primarily at prospective waivers of rights and clauses concealing the details of discrimination claims, the full scope of this law’s applicability will become clear only after it has been interpreted by the courts.  For example, one of the most significant open questions is whether New Jersey courts will deem mandatory arbitration provisions in employment agreements unenforceable as to discrimination claims and, if they do, whether the Federal Arbitration Act will, in turn, be deemed to preempt such a limitation on the enforcement of arbitration clauses.  Another important question is whether courts will construe this law to bar confidentiality provisions in settlement agreements that restrict employees from disclosing the terms of the settlement.

As we wait for the courts to resolve these and other open questions, employers should proceed thoughtfully when seeking confidentiality in connection with a claim of discrimination.  A precisely drafted confidentiality agreement or policy might be desirable in some situations, such as to preserve the integrity of an ongoing investigation, but employers need to be mindful of this law and understand the limitations and potential consequences of requiring confidentiality and/or taking disciplinary action when confidentiality is breached.  Employers relying on mandatory arbitration provisions should also consider the impact of this law and consult their counsel in evaluating whether to exclude discrimination claims from arbitration. 

If you have any questions about this legal alert or if you run across a related issue in your workplace, please feel free to contact Adam Gersh or any other member of Flaster Greenberg’s Labor & Employment Department.

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