You work for an employer. You’re fired, or let’s say you’re terminated, or you separate from your employer. You sue your former employer. You settle the case. A settlement agreement is signed. The agreement says you can’t disclose the terms of the agreement or say bad things to the public about your employer. You for whatever reason start disclosing the terms of the agreement and badmouth the employer. Your employer threatens to sue you for breach of the settlement agreement. Are you at risk? The answer is “yes” and “no.” Let me explain my answer.
At the state level, several years ago New Jersey’s Legislature targeted non-disclosure provisions as an improper restriction on employees’ rights. It amended the New Jersey Law Against Discrimination (NJLAD) to prohibit non-disclosure provisions in employment contracts or settlement agreements intended to conceal the details of discrimination, retaliation, or harassment claims. The law expressly states that such provisions are unenforceable and against public policy in New Jersey.
Still, in this state many non-disparagement provisions remain enforceable. Non-disparagement provisions which are negotiated, agreed upon as a material term, create a “mutual and reciprocal obligation” that protects both parties, as opposed to a non-disclosure provision. However, the New Jersey Legislature will likely adopt new laws to further amend NJLAD to treat non-disparagement clauses identical to non-disclosure clauses. These laws will expand non-disclosure and non-disparagement provisions, as well as “other similar agreements,” in employment contracts and settlement agreements if they have “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.”
Conclusion
As with any employment law, employers will need to look at their non-disparagement and non-disclosure provisions and evaluate whether and how to use them.
To discuss your NJ employment law matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Employment Law Attorney