On Monday, March 18, 2019, Governor Phil Murphy signed Senate Bill No. 121, which makes nondisclosure provisions in employment contracts or settlement agreements that are intended to conceal the details of claims of discrimination, retaliation, or harassment unenforceable and against public policy in New Jersey. Section 1 of the new law warns that a “provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment” is against public policy and unenforceable.” The law does not define “employment contract” and leaves open to interpretation whether it applies to all agreements between employer and employee, whether an employment agreement, a separation agreement, or a settlement agreement. The prohibition on waiving any procedural right would make arbitration agreements, which by their nature waive the right to a jury trial, also invalid and unenforceable in contravention of the Federal Arbitration Act and recent United States Supreme Court precedent. An immediate challenge to this aspect of the law is likely since it casts doubt on all arbitration agreements between an employer and employee that seek to include claims of discrimination, harassment, and retaliation. Section 1 also prohibits a prospective waiver of any right or remedy under the New Jersey Law Against Discrimination (NJLAD) or any other statute or...
Tax Bill Effects the Use of Nondisclosure Provisions in Settlements of Sexual Harassment and Sexual Abuse Claims
While the Tax Cuts and Jobs Act (“the Act”), signed into law today, has received considerable media coverage, a provision included in the Act that affects the ability of employers to deduct settlement payments and attorney’s fees for claims involving sexual assault or sexual harassment has received little attention. Nonetheless, this provision will have a significant impact on how employers resolve claims of sexual harassment and sexual abuse. Specifically, the Act provides that any settlement or payment related to claims of sexual harassment or sexual abuse may not be deducted as a business expense if the payments are subject to a nondisclosure agreement. The Act also provides that any attorney’s fees incurred related to such a settlement with a nondisclosure agreement may not be deducted. The new law applies to “any settlement or payment related claims of sexual harassment or sexual abuse” whether or not a lawsuit has actually been filed. Importantly, these provisions are effective immediately, and thus all payments made after the effective date of the Act in connection with the settlement of a sexual harassment or a sexual assault claim are subject to these new provisions. Read literally, the new law precludes employers from deducting the amounts of such settlements for payments made after the effective date of the Act even if...
New Jersey Supreme Court Upholds Oral Settlement Reached During Mediation, But Requires Future Settlements to Be Written
In a recent 6-0 opinion, the New Jersey Supreme Court has held that, going forward, settlement agreements reached during court-ordered mediation must be reduced to a signed writing before mediation ends in order to be enforceable. The Court also found that a party waives New Jersey’s mediation-communication privilege, set forth in N.J.R.E. 519, by not objecting to evidence of conversations that took place during the mediation and by offering evidence of mediation communications.
The U.S. District Court for the Southern District of New York (“SDNY”) recently issued a Notice to the Bar advising that effective January 3, 2011, all employment discrimination cases, except cases filed under the Fair Labor Standards Act, will be automatically referred for early mediation through the court’s Alternative Dispute Resolution program.