New Jersey Supreme Court Decision Requires Review of Non-Disparagement Agreements

On May 7, 2024, the New Jersey Supreme Court ruled that non-disparagement provisions precluding discussion of discrimination, retaliation, or harassment claims are unenforceable. We delve into the Court’s reasoning, as well as the implications for employers in the state.

Christine Savage, a former police officer for the Township of Neptune Police Department, first sued her employer, the Township of Neptune, and others under the New Jersey Law Against Discrimination (LAD) in December 2013. The parties eventually settled, mutually agreeing not to make any statements “regarding the past behavior of the parties” that “would tend to disparage or impugn the reputation of any party.”

However, Savage later participated in a televised news segment about her lawsuit, during which she stated that Neptune’s police department was a “good ol’ boy system” that “abused [her] for about eight years” and “[didn’t] want women there,” and that she was “being financially choked out” and “oppressed.” The news reporter also referred to “harassment and retaliation,” “bogus disciplinary charges,” a “psych exam” that Savage claimed was a “set up” and resulted in an unpaid leave, and the “uphill battle” women seeking promotions faced in the police department.

Citing these statements, the defendants moved to enforce the non-disparagement provision in Savage’s settlement agreement. A trial court granted their motion, awarded them fees and costs, and ordered Savage to abide by the non-disparagement provision. New Jersey’s Appellate Division affirmed in part and reversed in part, holding that while the non-disparagement clause was enforceable, Savage had not violated it because Savage’s comments were about present or future behavior—not the past behavior that the parties’ non-disparagement agreement concerned.

Savage appealed to the New Jersey Supreme Court, seeking a ruling that the non-disparagement provision was unenforceable under section 12.8(a) of the LAD (N.J.S.A. 10:5-12.8(a)), which prohibits as against public policy any provision in an employment contract or settlement agreement that “has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation or harassment.”

The New Jersey Supreme Court Decision

The Supreme Court held that the parties’ non-disparagement provision was unenforceable under section 12.8(a) of the LAD for several reasons.

First, the Court interpreted section 12.8(a)’s plain language, highlighting that it barred contractual “non-disclosure provisions” that have the “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation or harassment.” The Court held that the term “non-disclosure provision[s]” was simply a “shorthand reference,” so the statute’s “operative language” applied equally to non-disparagement provisions. The Court also explained that subsection 12.8(c) of the LAD exempted certain types of nondisclosure clauses, namely non-competition provisions and agreements not to disclose proprietary information or trade secrets, but did not exempt non-disparagement provisions.

As part of its analysis, the Court broadly construed the statute to prohibit any agreement that prevented statements about past, present, and future harassment, discrimination, or retaliation claims, regardless of whether or not those claims give rise to a settlement agreement. Thus, the Court determined that section 12.8(a) protected all the post-settlement statements Savage and the reporter had made during the news conference.

The Court further emphasized that section 12.8(a) was enacted in the wake of the “#MeToo” movement, with the overall purpose of preventing settlement agreements or employment contracts from silencing individuals as to certain claims, so the statute’s legislative history reinforced its plain meaning.

Although the Court noted that parties could, in theory, agree not to disparage one another as to information having nothing to do with a claim of discrimination, retaliation, or harassment, it warned that such an agreement would have to be “narrowly drawn to ensure that details relating to the claims listed in section 12.8 could be revealed publicly.”

Implications

In New Jersey, employment contracts and settlement agreements may not restrict speech that touches, even broadly, on alleged “discrimination, retaliation or harassment,” in the past, present, or future. Provisions to that effect, whether styled as non-disclosure or non-disparagement, are unenforceable.

In light of this ruling, employers in New Jersey should assess their use of employment contracts or settlement agreements with regard to non-disclosure or non-disparagement provisions to ensure their agreements do not have the “the purpose or effect” of barring statements that could relate to discrimination, retaliation, or harassment.