NJ Bill Prohibits Restraints on Litigating Discrimination Claims

NJ Bill Prohibits Restraints on Litigating Discrimination Claims

The NJ Senate recently introduced legislation, no doubt intending to improve the rights of employees who have discrimination claims, by requiring more transparency in litigating these claims. This bill, S3581, provides that provisions in an employment contract that waive “any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment” are contrary to public policy and would be unenforceable. Furthermore, this bill would prohibit any “prospective waiver of rights or remedies” such as a jury trial or mandatory arbitration of discrimination claims under the New Jersey Law Against Discrimination (“LAD”).

This bill also contains a provision designed to eliminate non-disclosure provisions in agreements resolving claims under the LAD. It deems these clauses as against public policy and therefore unenforceable.

Moreover, the bill prohibits an employer from taking retaliatory action (e.g., refusal to hire, discharge, suspension, or demotion) on the grounds that an individual refuses to enter into an agreement with terms contrary to the above.

Lastly, to the extent an employer seeks to enforce an agreement contrary to the bill, the employee may collect costs and reasonable attorney’s fees for defending against any such suit.

The bill would affect settlement agreements prospectively (not those entered into prior to the effective date specified). It also does not apply to the terms of collective bargaining agreements.

If passed, this bill would likely dramatically affect litigation and strategy of claims brought under the LAD. The inability of an employer to utilize arbitration procedures or insist upon confidentiality in settlement agreements may result in fewer out-of-court resolutions and more protracted and costly litigation. This is a double-edged sword for both employers and employees. That is, many employees would prefer to have their claims resolved privately without having to endure a long and public court battle.