The New Jersey State Senate has introduced a new bill, S-3581, that seeks to prohibit the use of arbitration clauses, non-disclosure provisions, and jury waivers related to claims under the New Jersey Law Against Discrimination (LAD).
Mandatory arbitration clauses in employment contracts are also known as forced arbitration. It means that should an employee have a complaint against their employer, they may not file a lawsuit in civil court. Instead the matter must be settled by arbitration, which is a closed process the results of which are sealed. The results of trials in civil court become a matter of public record.
Non-disclosure clauses in employment contracts are generally used to maintain the confidentiality of proprietary information, but may also be used as part of the terms of a settlement in a legal case that does not reach the trial stage. Under these circumstances, a non-disclosure provision bars both parties from discussing anything pertaining to the settlement.
Some employment contracts contain jury waiver clauses which require that the employee waive their seventh amendment right to a trial by jury in the event of a dispute with their employer.
New Jersey Law Against Discrimination
The New Jersey Law Against Discrimination (NJLAD) prohibits discrimination in the workplace based on a person’s race, sex, creed, color, national origin, sexual orientation, age, gender identity, genetic information, AIDS/HIV status, or marital status. No doubt inspired by the #MeToo movement, the new bill would provide more transparency on behalf of employees filing LAD claims by barring the kind of non-disclosure agreements that prevent victims of sexual harassment from speaking out.
Specifically, the proposed legislation says: “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.” For employers, this means that while trying to resolve LAD claims, it would be impossible to enforce any confidentiality or non-disclosure provisions contained in a settlement agreement.
The bill also protects employees who refuse to enter into agreements that do not comply with the provisions in the legislation. Employers are prohibited from retaliatory actions such as demotion, termination or refusal to hire, based on a refusal to sign an agreement that is contrary to the terms of S-3581.
Should an employer seek to enforce an agreement with terms contrary to the bill, they will be responsible for costs and reasonable attorney’s fees incurred by an employee defending themselves from such a suit.
Without the use of arbitration as an option, LAD litigation is likely to become more protracted and much costlier, something that both employers and employees have an interest in avoiding. Out of court settlements may be less frequent if the bill becomes law.
Marlton Employment Lawyers at McOmber McOmber & Luber, P.C. Provide Experienced Counsel in All Areas of Employment Law
The Marlton employment lawyers at McOmber McOmber & Luber, P.C. provide experienced and knowledgeable counsel to both employers and employees in all areas of employment law. For a free consultation with a seasoned employment lawyer in South Jersey, call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, our Newark office at 973-878-9040, or contact us at 888-396-0736 or online. We represent clients throughout New Jersey.