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N.J. Supreme Court Bans Broad “Non-Disparagement” Provisions in Agreements Settling Employment Discrimination, Harassment, and Retaliation Claims
Friday, May 17, 2024

In 2019, in response to the “#MeToo” movement, the New Jersey Legislature enacted a law that made any “non-disclosure provision” in an employment contract or settlement agreement unenforceable against the employee, if the provision 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 Law left unanswered whether it applied to “non-disparagement” provisions that are common in agreements settling employment disputes. 

On May 7, 2024, the New Jersey Supreme Court answered the question, ruling that regardless of whether labeled as “non-disclosure” or “non-disparagement,” as per the statute, any “provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment” is unenforceable and against public policy. Savage v. Twp. of Neptune, ---- A.3d ----, No. 087229, 2024 WL 2002418, at *7 (N.J. May 7, 2024).

The Supreme Court’s decision ended the latest of a series of disputes between Christine Savage and the Neptune Township Police Department, her former employer. In December 2013, Savage filed a lawsuit against the Department, the Township of Neptune, and others for sexual harassment, sex discrimination, and retaliation in violation of the New Jersey Law Against Discrimination (“LAD”). The parties entered into a settlement agreement in 2014.

Savage filed a second lawsuit in April 2016, alleging that some of the same defendants violated the 2014 settlement agreement and engaged in continuing sex discrimination, harassment, and retaliation in violation of the LAD and other laws. The parties entered into another settlement agreement in July 2020. Among other terms, the second settlement agreement contained the following provision, with emphasis provided by the Supreme Court:

The 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. The parties agree that this non disparagement provision extends to statements, written or verbal, including but not limited to, the news media, radio, television, ... government offices or police departments or members of the public.

About a month after the settlement, a local TV station aired a news segment about the case. The segment contained interviews between Savage and a reporter, which the Court quoted from in detail and are excerpted below. 

Savage: My integrity’s intact and I get to keep my rank, you couldn’t fire me, you couldn’t demote me, you abused me, you abused me for about 8 years.

Reporter: Savage says the harassment and retaliation intensified with bogus disciplinary charges.

. . .

Savage: I really don’t think you’re ever going to see another female sergeant, lieutenant, captain or above.

Reporter: Because?

Savage: Because we’re oppressed. They don’t want women there.

Reporter: Has it not changed?

Savage: It has not changed, not for a minute. It’s not gonna change, it’s the good ol’ boy system.

Weeks after the segment aired, defendants filed a motion to enforce the non-disparagement provision, which the trial court granted along with fees and costs. The Appellate Division affirmed in part and reversed in part, and the Supreme Court then granted Savage’s petition for certification. 255 N.J. 284 (2023).

In examining the non-disparagement provision in the settlement agreement, the Supreme Court focused on the text of the Law, emphasizing that the “law’s critical language . . . bars provisions in settlement agreements that have ‘the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.’” 2024 WL 2002418, at *7. Thus, the Court ruled, regardless of the type or purpose of a contractual provision in an employment or settlement agreement, if it has the purpose or effect of preventing the disclosure of the details of the claim, it is not enforceable—even if the details relating to the claim disparage the employer.

The Supreme Court noted that it may be possible to draft a non-disparagement provision in a settlement agreement that still permits the employee to discuss the details of the alleged discrimination, retaliation, or harassment, but did not offer any guidance on how to do so, stating only that “parties could agree not to disclose details about their personal lives or matters unrelated to a discrimination claim -- like ‘my employer drinks heavily at work’ or ‘cheats on his taxes.’” Id. at *8. The Court warned, however 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.” Id

This ruling makes explicit that employers settling employment discrimination lawsuits in New Jersey will not be able to prohibit the settling employee from discussing the underlying allegations of their claims. Any non-disparagement provisions that parties wish to include will need to be carefully (and narrowly) drafted to avoid running afoul of N.J.S.A. § 10:5-12.8(a) and the Savage decision.

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