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May 2024

New Jersey Supreme Court Rules Against Non-Disparagement Clauses

Due to a recent New Jersey Supreme Court ruling, employers can no longer include a non-disparagement clause in a settlement agreement that would bar a plaintiff from describing an employer's alleged discriminatory conduct as this would now violate N.J.S.A.10:5-12.8(a) of the New Jersey Law Against Discrimination ("LAD").

In Christine Savage v. Township of Neptune (A-2-23), decided May 7, 2024, Chief Justice Rabner ruled on behalf of a unanimous New Jersey Supreme Court that a non-disparagement clause that would prevent a plaintiff from providing details relating to a claim of discrimination, retaliation, and harassment against an employer is speech that the LAD protects. Therefore, a non-disparagement clause that seeks to prevent such activity is against public policy and cannot be enforced. This ruling overturned the trial court's initial ruling that the LAD barred only non-disclosure and confidentiality agreements and the Appellate Division's ruling that the non-disparagement clause was enforceable.  

Lieutenant Christine Savage filed a second complaint of violation of the Law Against Discrimination in April 2016 against her employer, the Neptune Township Police Department, the Township of Neptune, Michael J. Bascom, and James M. Hunt (collectively "defendant"). Savage alleged that the defendants violated the settlement agreement from her first LAD lawsuit against some of the same defendants and that the discrimination, harassment, and retaliation towards her intensified after she settled her first claim. Savage's second LAD complaint was settled in July 2020 and included a non-disparagement clause, which is at issue here.

The broad non-disparagement clause states, "[t]he parties agree not to make any statements written or verbal, or cause or encourage others to make any statements, written or verbal, regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party."  

Defendants argued that Savage violated the non-disparagement provision clause when she made comments regarding her allegations of discrimination, harassment, and retaliation against her and women more broadly in her former workplace as part of an interview with NBC 4 New York.

Due to the broad nature of the non-disparagement clause, the court found that said clause would prevent the plaintiff from accusing the defendants of misconduct. Further, the plaintiff could not provide details about allegations of discrimination, retaliation, or sexual harassment by her former employer. As such, this type of non-disparagement clause would prevent a discussion of the details of the claims of discrimination, which is what section N.J.S.A. 10:5-12.8(a) protects. The LAD prevents a bar on speech regarding more information relating to a claim of discrimination, retaliation, or harassment. The non-disparagement clause sought to enjoin Savage from making further statements about her claims, essentially preventing her from speaking of her claims of discrimination, retaliation, and harassment.

Based on this new ruling, standard non-disparagement clauses drafted to provide as much protection to the employer as possible can no longer be used. A non-disparagement clause will now have to be more narrowly drafted to ensure that there is no bar on statements, even if disparaging, describing the plaintiff's claim of retaliation, harassment, or discrimination. 

Employment Law

Scott V. Heck

Employment Law