Late last year, Senator Loretta Weinberg, (D) Bergen County, introduced a bill that would (a) bar any provision in a settlement agreement that purports to waive a substantive or procedural right or remedy; and (b) prohibit the use of non-disclosure agreements in settlements of sexual harassment claims.
That bill died in committee but was re-introduced at the start of the current legislative session that began in January. The re-introduced bill, SB 121, was reported out of the Senate Labor Committee, with amendments, on March 5, 2018 by a unanimous vote of 5-0.
As amended, the bill retains the prohibitions against the waiver of substantive or procedural rights or remedies and the incorporation of non-disclosure provisions in settlement agreements.
Notable amendments include (a) expansion of the bar on non-disclosure provisions to encompass settlement agreements of claims of discrimination, retaliation, harassment or other violations of New Jersey’s Law Against Discrimination; and (b) a provision barring language in an employment agreement that has the purpose or effect of concealing details relating to a claim of discrimination, harassment or retaliation, including claims that are submitted to arbitration.
The basis of the proposed legislation is that forced acceptance of arbitration and the concealment of behavior or actions that violate state laws are against public policy and are therefore unenforceable. Under SB 121, an employer found to have enforced or attempted to enforce a provision deemed against public policy would be responsible for an employee’s reasonable attorney fees and costs.
The bill also provides that no employer may take retaliatory action, including, but not limited to failure to hire, discharge, suspension, demotion or discrimination in the terms and conditions of employment against a person who declines to enter into a contract or agreement that contains language deemed against public policy and is therefore unenforceable under the bill.
The favorable report out of the Senate Labor Committee would indicate that SB 121 has gained some traction in its re-introduced form, but passage is by no means certain. Even if the bill is approved, it could face court challenge as contrary to the policy of encouraging arbitration as enunciated by federal courts, including the US Supreme Court.
That said, the efficiency and expediency of arbitration and settlement agreements have to be weighed against a policy that has the effect of concealing behavior that is inarguably reprehensible, if not unlawful, and the momentum of #MeToo cannot be discounted as a factor as this legislation moves toward a vote.