Laws have been enacted throughout the United States in the wake of the #MeToo movement which have served to erode the confidentially and non-disparagement protections that settlement agreements typically provide employers.
One such law, enacted in 2019 by the New Jersey Legislature, directed that an employment contract or settlement agreement would be unenforceable if the provisions had “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.” N.J.S.A. § 10:5-12.8(a) (the Law). The scope of this Law was undecided until the New Jersey Supreme Court’s recent unanimous decision on May 7 in Savage v. Twp. Of Neptune.
The Facts of the Case and Procedural History
Christine Savage is a former police officer of the Neptune Township Police Department. In December 2013, Savage filed a lawsuit alleging sexual harassment, sex discrimination, and retaliation in violation of the NJLAD against the department, the Neptune Township, and others. The parties later entered into a settlement agreement.
In April 2016, Savage filed a second lawsuit alleging that some of the same parties had continued to engage in sex discrimination, harassment, and retaliation. In 2020, the parties entered into a second settlement agreement which, in part, included the following terms:
The parties agree to not make any statements written or verbal, or cause or encourage any others to make statements, written or verbal regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party. The parties agree that this non-disparagement provision extends to statements, written or verbal, including but not limited to, the new media, radio, television,...government offices or police departments or members of the public.
A few weeks after signing this settlement agreement, Savage appeared on NBC’s Channel 4 News. Savage was asked by the reporter whether she believed the department had changed since her settlement and she replied, in part, that the department does not want women and “[i]t has not changed, not for a minute. It’s not gonna change, it’s the good ol’ boy system.”
Several weeks after the Channel 4 segment aired, the defendants filed a motion to enforce the settlement agreement’s non-disparagement provision. The trial court granted this motion with fees and costs. The Appellate Division affirmed, in part, and reversed in part. Savage then filed a petition for certification which the New Jersey Supreme Court granted.
The Holding
The Supreme Court examined the #MeToo Law and held that any provision, whether a non-disparagement provision or otherwise, which has the effect of concealing the details related to a claim of discrimination, retaliation, or harassment runs afoul of the Law. On this basis, the court held that the non-disparagement provision in Savage’s settlement agreement had that effect and as such, violated the Law.
Advice to Employers
Practically speaking, non-disparagement provisions were always difficult for employers to enforce. While they were useful deterrents in preventing former employees from making disparaging remarks about their employers, they could only be enforced after an employee had made a statement and the damage was effectively done.
Nevertheless, this is not a positive development for employers. The court was unanimous that employers can no longer include provisions intended to prevent a former employee from speaking about the underlying basis of their discrimination, harassment, or retaliation claims under the NJLAD. However, the court did stop short of banning non-disparagement provisions entirely. The court theorized that it could be possible to draft a non-disparagement provision in a settlement agreement that banned employees from speaking on matters unrelated to their discrimination claim but this would have to be narrowly drawn.
Savage v. Twp. of Neptune marks a significant change in the employment discrimination legal landscape. Employers should contact our offices for advice on how to navigate these changes and whether non-disparagement provisions can be honed to comply with the new ruling.
This article originally appeared on Goldberg Segalla.
About the Authors:
Conor R. Wiggins is an associate at Goldberg Segalla.
Scott R. Green is a partner at Goldberg Segalla.
Caroline J. Berdzik is a partner at Goldberg Segalla.