During the midst of the Me-Too Movement, the New Jersey Law Against Discrimination (“NJLAD”) was amended to make it easier for victims of harassment, retaliation, and discrimination to avoid onerous confidentiality restrictions that prevented those employees from discussing such claims after those matters were resolved with their employer. Specifically, that amendment, N.J.S.A. 10:5-12.8(a), provides 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 against a current or former employee.” An open issue that was left unaddressed in the law was whether a contractual non-disparagement provision that typically precludes the employee from saying anything derogatory or damaging about an employer was covered by this statutory restriction. On May 7, 2024, the New Jersey Supreme Court finally provided its answer to this important open statutory issue.
In Savage v. Township of Neptune, 257 N.J. 204 (2024), the New Jersey Supreme Court was asked to determine whether a broad contractual non-disparagement clause in a settlement agreement between the Defendant employer and Plaintiff former employee fell within the statutory restrictions of N.J.S.A. 10:5-12.8(a). The Township of Neptune sought to enforce a non-disparagement provision in a settlement agreement between it and the Plaintiff, who during a television news program, discussed her settled case and made unflattering statements about those she believed had harassed her. The trial court granted the Township’s motion to enforce the provision, finding that the NJLAD amendment barred only non-disclosure and confidentiality agreements, and Plaintiff here had instead violated an enforceable non-disparagement provision. This decision was then upheld by the appellate court which similarly determined that a non-disparagement clause was nevertheless enforceable despite N.J.S.A. 10:5-12.8(a).
Disagreeing with the lower courts that previously considered the issue, the New Jersey Supreme Court ruled that any contractual provision that has the effect of stopping an employee or former employee from being able to discuss or disclose the factual circumstances or details of a harassment, discrimination or retaliation claim violates N.J.S.A. 10:5-12.8(a) and is thus not enforceable as it is contrary to public policy. Applying that standard to the non-disparagement provision before it, the Court ruled that as written it was violative of N.J.S.A. 10:5-12.8(a) and could not be enforced against Plaintiff because its effect was to silence the former employee’s ability to discuss her past harassment and discrimination claims against Defendant.
Significantly for employers, while the Savage case may have ultimately been a win for the Plaintiff, it could have been far worse. Thankfully the Court’s ruling did not go so far as to categorically ban all non-disparagement provisions. Instead, the decision still leaves open the possibility of enforcement of more narrowly tailored non-disparagement provisions that do not impair an employee’s ability to address the details relating to harassment, discrimination, and retaliation claims. Thus, a properly drafted contractual non-disparagement clause can still be enforceable and beneficial for the employer, as the employer may continue to prevent the making of defamatory and disparaging comments regarding other unrelated subjects and topics that do not fall within the express restrictions of N.J.S.A. 10:5-12.8(a).
Accordingly, in light of the Savage decision, employers should immediately commence a review of all their employment contracts and severance agreements and bring any non-disparagement provisions in line with the new limitations on enforceability recently announced by the New Jersey Supreme Court.
