New Jersey Limits Power of Nondisclosure Agreements

NDAs Employee

In March 2019, New Jersey rejected nondisclosure agreements that stop people from discussing their harassment, discrimination or retaliation claims. A strong move in favor of employees, many saw it in the light of the #MeToo movement that so much discussed during the winter before.

It may take the new law’s first anniversary to begin usefully talking about its effect on companies, work culture and claimants. So far, its effects do not seem to overwhelm New Jersey’s business landscape.

What the Law Does

The law significantly decreases the power of mediation and arbitration agreements, which typically made employees agree to stay out of the courts and use secret negotiation as a way of settling claims.

The new law takes away some of the main attractions of agreements of that kind, especially their ability to enforce confidentiality and prevent attention from falling on the employee claims.

The law declared all provisions of contracts and settlements that have to do with harassment, discrimination or retaliation to be unenforceable and against public policy if they try to either:

  • waive the employee’s rights or remedies relating to a claim
  • make the employee conceal the details of a claim

The law does not mention what kind of harassment, discrimination or retaliation it means, so the future will probably test the limits of the law’s reach. Such a sweeping change in contract law, of course, has the potential for unexpected consequences and is likely to keep raising questions.

Limits to the Law

The law says that if the employee publicly discusses the terms of a claim with enough detail that the identity of the employer is reasonably clear, the employer is also free to discuss their side, a likely reason for everyone to stay reasonably quiet most of the time.

The law also does not apply to collective bargaining agreements. It also does not apply to do-not-compete agreements and allows protection of trade and other business secrets.