Non-Disparagement Clauses Enforceable in New Jersey Employment Settlement Agreements
Source: Saiber Labor Law Alert
Although New Jersey clearly prohibited non-disclosure provisions in employment contracts and settlement agreements in 2019 NJSA 10:5-12.8 regarding claims of discrimination, retaliation, or harassment, there was an open question as to whether this prohibition extended to non-disparagement clauses. The Appeals Division has now answered this question in the negative in a recently published decision.
in the Savage vs Parish Neptune, No. A-1415-20 (App. Div. May 31, 2022), plaintiff Christine Savage worked as a police officer with the Neptune Police Department. In 2016, she filed a lawsuit against the Neptune Police Department and other defendants, alleging relevant portions of sexual harassment, gender discrimination, and retaliation under the Anti-Discrimination Act. The parties settled the lawsuit in 2020. The settlement agreement contained a non-disparagement clause, in which the parties agreed “not to make any written or oral representations. . . in relation to the past conduct of the parties, statements of which would tend to denigrate or attack a party’s reputation.”
Just days after receiving her settlement payment, the plaintiff took part in an interview with an NBC news reporter in which she made comments about how she was abused and oppressed at work, that the Neptune Police Department “doesn’t want women there” and that The workplace culture “hasn’t changed” and has remained a “good old system”. The defendants then filed a motion to enforce the settlement agreement, arguing that the plaintiff’s statements during the NBC interview violated the non-libel provision.
First, the Appellate Division rejected the plaintiff’s argument that the non-defamation provision had been violated NJSA 10:5-12.8(a) because the law does not apply to non-disparagement clauses. The court recognized that there is a difference between a non-disclosure provision prohibited by law and a non-libel provision. The former prohibits the parties from disclosing facts related to the court proceeding and/or the settlement agreement, while the latter prohibits the parties from communicating anything negative about each other. The court held that the legislature could have prohibited the enforcement of non-denigration provisions but did not, leading the court to conclude that the omission was notable. The court ruled that “the plain language of the law suggests that it was intended only to prevent employers from forcing workers into agreements to obscure the details of their LAD claims.”
Although the court ruled that the parties’ non-disparagement clause was enforceable, it ultimately found that the plaintiff had not breached its terms. The non-disparagement clause expressly prohibited the parties from “making any written or oral representations . . . regarding the past behavior of the partieswhat statements would tend to disparage or attack a party’s reputation.” (emphasis added). The court ruled that the plaintiff’s statements that women were “oppressed,” that the department “didn’t want women there,” and that the department “hadn’t changed” would not change and was “the good old boy system.” to the accused currently and future Behavior. As such, these comments did not fall within the scope of the non-disparagement clause.