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...
In Roman v. Bergen Logistics, LLC, the Appellate Division recently held that a plaintiff was required to arbitrate her claims of sexual harassment and retaliation with her former employer. The court also held, however, that the arbitration agreement’s contractual provision that barred the employee’s access to punitive damages was unenforceable. Background Plaintiff Milagros Roman was hired by the defendant, Bergen Logistics, as a human resources generalist. She signed an arbitration agreement at the outset of her employment. In addition to requiring Roman to arbitrate any and all claims related to her employment, the arbitration agreement compelled her to waive any claim for punitive damages. After her termination, Roman filed a complaint in New Jersey Superior Court alleging that her former supervisor sexually harassed her, created a hostile work environment, and retaliated against her in violation of the New Jersey Law Against Discrimination (LAD). The defendants moved to dismiss Roman’s complaint and compel her to arbitrate her claims. The Law Division found that Roman knowingly signed the arbitration agreement and that the agreement contained an unambiguous waiver of claims for punitive damages. Accordingly, that court held that Roman was required to submit her claims to arbitration and could not seek punitive...
New Jersey Senate Labor Committee Amends Bill Prohibiting Use of Nondisclosure Provisions in Employment and Settlement Agreements
In response to the recent spotlight on sexual abuse and harassment claims in the workplace and the #MeToo movement, the federal government and numerous states, including New Jersey, have focused attention on the use of nondisclosure provisions in settlement agreements involving claims of sexual harassment and assault. As we previously reported, the Tax Cuts and Job Bills Act was passed in December 2017 and includes a provision that bars any settlement or payment related to claims of sexual harassment or sexual abuse from being deducted as a business expense if the payments are subject to a nondisclosure agreement. While the federal tax bill aims to discourage the use of nondisclosure agreements, the proposed New Jersey legislation initially provided an outright ban on such agreements. At the time of its first introduction during the prior legislative session in December 2017, Senator Loretta Weinberg’s proposed bill prohibited New Jersey employers from including “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.” The bill is unique because it is not limited to sexual harassment or abuse claims, but rather would apply to any type of discrimination,...
Last week, in Socko v. Mid-Atlantic Systems of CPA, Inc., the Supreme Court of Pennsylvania decided that restrictive covenants not to compete are unenforceable if made during a worker’s term of employment unless supported by “new and valuable consideration, beyond mere continued employment.” That is so, according to the Court, even if the agreement contains language that would otherwise obviate the requirement of consideration pursuant to the Uniform Written Obligations Act (“UWOA”). That statute provides that “[a] written release or promise . . . shall not be invalid or unenforceable for lack of consideration, if the writing also contains an additional express statement, in any form of language, that the signer intends to be legally bound.”
NJ Supreme Court Holds Employers May Seek Disgorgement of Disloyal Employee’s Pay Without Proof of Loss
In Kaye v. Rosefielde, the New Jersey Supreme Court held that disgorgement of a disloyal employee’s salary can be an appropriate remedy for breach of loyalty claims even in the absence of proof of actual economic loss. In an unanimous decision, the Court noted the trial court’s broad discretion to fashion equitable remedies, including disgorgement of an employee’s salary, and instructed lower courts that the amount of the disgorgement should be limited to the compensation that the employee received during the employee’s period(s) of disloyalty.
A Federal District Court recently refused to dismiss a complaint for lack of subject matter jurisdiction because, among several state law claims, the plaintiff – the individual defendant’s former employer – also asserted a claim under the Federal Computer Fraud and Abuse Act (CFAA). In NouvEON Tech. Partners, Inc. v. McClure, No. 3:12-CV-633-FDW-DCK, 2013 U.S. Dist. LEXIS 29208 (March 5, 2013), a North Carolina Federal District Court denied defendants’ Rule 12(b)(1) motion to dismiss, for lack of subject matter jurisdiction, a myriad of state law claims filed by NouvEON against its former employee (McClure) and her new employer (Smarter Systems).
On January 3, 2012, The National Labor Relations Board issued its decision in, D.R. Horton, Inc. Case No. 12-CA-25764. This is a significant decision for all employers as it prohibits the use of class action waivers in employment arbitration agreements. Specifically, the Board held that arbitration agreements that contain provisions that prohibit employees from filing joint, class or collective claims addressing their wages, hours or other working conditions against their employer, in any forum, violate Section 8(a)(1) of the National Labor Relations Act (NLRA).
In the most recent issue of the New Jersey Labor & Employment Quarterly, Kelly Ann Bird and Zeenat Basrai analyze whether an employee can release claims under the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) as part of a separation agreement. The scant caselaw construing USERRA has resulted in confusion over whether USERRA claims can be waived, and if so, what language a waiver must include to be enforceable. The article discusses practical steps employers can take to protect themselves from an employee bringing a USERRA claim after signing a separation or settlement agreement, such as drafting the waiver using clear and unambiguous language and giving the employee sufficient time to review and consider the agreement before signing it.
Recent New Jersey Appellate Division Case Reminds Employers to Carefully Draft Written Communications to Employees Regarding Leaves of Absence
The New Jersey Appellate Division’s recent decision in Lapidoth v. Telcordia Techs., Inc., 2011 N.J. Super. LEXIS 103 (App. Div. June 9, 2011) serves as an important reminder that an employer must exercise care in communications with employees regarding leaves of absence to avoid unintended contractual obligations, even when the employer has complied with its statutory obligations.