On Monday, March 18, 2019, New Jersey Governor Phil Murphy signed Senate Bill 121 into law. Much like the federal government’s “Weinstein Tax” law, Senate Bill 121 is New Jersey’s efforts to curtail workplace harassment in response to the Harvey Weinstein sexual abuse allegations made prominent in late 2017. The new law applies to claims by employees against employers for discrimination, retaliation or harassment. Per the new law: (1) any provision in an employment contract that waives any substantive or procedural right or remedy of such a claim is unenforceable; (2) non-disclosure or confidentiality provisions are unenforceable by an employer against an employee, even if the parties agree to such non-disclosure or confidentiality; (3) certain notice provisions must be included in all settlement agreements; and (4) an employer cannot retaliate against any person for refusing to enter into a contract that contains a provision deemed against public policy and enforceable.
Senate Bill 121 creates some legal complexities. For instance, many employment contracts contain a binding arbitration agreement wherein the employer and employee agree that any employment related dispute will be decided by binding arbitration. Senate Bill 121 states that waivers of “substantive or procedural rights” are unenforceable. Whether a binding arbitration agreement for claims of discrimination, retaliation and harassment constitutes a waiver of “substantive or procedural rights” is a murky question of law. The Supreme Court of the United States has held that state laws prohibiting the arbitration of a particular type of claim are preempted by the Federal Arbitration Act – a federal law generally mandating that arbitration agreements are valid and enforceable.
Senate Bill 121 could potentially put employers in a catch-22 situation if a prospective employee refuses to sign an employment contract that contains an arbitration provision. If the provision is deemed a waiver of substantive and procedure rights, then the prospective employee would be permitted to file a lawsuit against the employer for violating the non-retaliation provisions of the law. Thus, Senate Bill 121 forces an employer to choose between hiring a job applicant who refuses to sign a binding arbitration agreement, or not hiring that job applicant and exposing itself to a lawsuit. In the latter scenario, the employer would be in the unenviable position of arguing that the arbitration provision does not waive “substantive or procedural rights” or that this provision of Senate Bill 121 is preempted by the Federal Arbitration Act.
StraighforWARD Legal Advice:
Employers in New Jersey should seek legal advice regarding any arbitration or confidentiality provisions in their employee handbooks, employment contracts, severance agreements and settlement agreements. Christopher M. Curci, Esq. is a Partner at Ward Law, LLC and practices Labor & Employment law throughout Pennsylvania and New Jersey. His clients range from small local businesses to large national companies and he provides daily advice and guidance on all matters of Labor & Employment law. Christopher Curci can be reached at ccurci@thewardlaw.com or 215-647-6603 or please Click Here.