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Citing Post #MeToo Legislature, Supreme Court Limits Non-Disclosure Agreements That Conceal Discrimination
By Susan S. Hodges, Jacob A. Riley on May 29, 2024
Citing Post #MeToo Legislature, Supreme Court Limits Non-Disclosure Agreements That Conceal Discrimination

On May 7, 2024, the Supreme Court of New Jersey decided Savage v. Neptune Twp. Police Dept., et al., finding that non-disparagement or non-disclosure clauses in employment contracts or settlement agreements that have the purpose or effect of concealing discrimination, retaliation, or harassment are against public policy and are, therefore, unenforceable in New Jersey.

In Savage, a female police sergeant had signed a settlement agreement with her former police department which included language that restricted the parties from making written or verbal statements regarding the past behavior of the parties that would tend to disparage or impugn the reputation of the other party. Despite this agreement, however, Ms. Savage gave an interview to a New York television station, which resulted in the Neptune Police Department to seek enforcement of the non-disparagement agreement against Ms. Savage.

Despite both the trial court and the Appellate Division finding that the clause was enforceable either in whole or in part, the Supreme Court reversed and found that the clause violated the New Jersey Law Against Discrimination (“NJLAD”). N.J.S.A. 10:5-12.8 of the NJLAD, passed in the wake of the “#MeToo” movement, specifically states that an “employment contract or settlement 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 against a current or former employee . . .”

In finding Ms. Savage’s particular non-disparagement clause unenforceable, the Supreme Court found that the NJLAD disallows such clauses regardless of whether they are called non-disparagement or non-disclosure clauses or agreements. Rather, the determining factor is whether the clause has the purpose or effect of disallowing the disclosure of claims related to discrimination, retaliation, or harassment. The holding of the Court does carve clauses related to the disclosure of trade secrets or non-disparagement clauses that would not implicate claims of discrimination, retaliation, or harassment, however.

Ultimately, employers should be aware that non-disparagement clauses in their past, present, and future employment contracts or settlement agreements will likely be found to be unenforceable should an employee be restrained by such agreements from discussing issues related to harassment, retaliation, or discrimination.

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