If you haven’t updated your employment contracts and settlement agreements in light of the New Jersey Supreme Court’s May 2024 Savage v. Township of Neptune decision, your time to do so may be running out. In Savage v. Township of Neptune, the court unanimously held that any provision in an employment contract or settlement agreement, including a non-disparagement provision, that has the purpose or effect of concealing details relating to claims of discrimination, retaliation, and harassment is unenforceable and against public policy.
The New Jersey Legislature is now moving to codify the court’s decision through Senate Bill S1688 which, if enacted, would amend N.J.S.A. 10:5-12.8(a) to expressly include non-disparagement provisions – and other similar agreements – within the scope of banned confidentiality provisions under the New Jersey Law Against Discrimination (NJLAD).
Savage v. Township of Neptune
In Savage v. Township of Neptune, former police officer Christine Savage filed a lawsuit against the Township of Neptune alleging claims of sexual harassment, discrimination, and retaliation in violation of the NJLAD. To settle the claims, the parties entered into a settlement agreement which contained a non-disparagement provision. Thereafter, Savage gave a televised interview in which she made statements about the case, her former employer, and alleged harassers.
The Township of Neptune sought to enforce the settlement agreement, relying on N.J.S.A. 10:5-12.8(a) which states, in part:
A 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, (hereinafter referred to as a “non-disclosure provision”) shall be deemed against public policy and unenforceable against a current or former employee . . . who is a party to the contract or settlement.
Following an analysis of the statute and its legislative intent, the court found that the statute applies to both non-disclosure and non-disparagement provisions. The court also noted that the statute’s protections extend to statements made beyond the courtroom that relate to any past, present, or future claims. For additional details on the court’s ruling and analysis, see HERE.
Proposed Revisions Under S1688
The Legislature seeks to amend N.J.S.A. 10:5-12.8(a) as follows (proposed changes underlined):
A 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, including, but not limited to, a non-disclosure or non-disparagement provision, or other similar agreement, (hereinafter referred to as a “non-disclosure or non-disparagement provision”) shall be deemed against public policy and unenforceable against a current or former employee . . . who is a party to the contract or settlement.
S1688 v. McLaren Macomb Restrictions
In February 2023, the National Labor Relations Board (NLRB) issued a decision in McLaren Macomb holding that employers violate the National Labor Relations Act by offering a severance agreement that conditions receipt of severance benefits on broad confidentiality and non-disparagement provisions (see HERE). Shortly thereafter, then-NLRB General Counsel Jennifer Abruzzo issued GC 23-05 providing guidance on the permissible scope of confidentiality and non-disparagement provisions in severance agreements (see HERE). Although the memo was rescinded in February 2025 (see HERE), the decision remains current law – accordingly, employers still may benefit from the memo’s guidance.
To navigate the parameters – and overlap – of restrictions under McLaren Macomb, as interpreted by the memo, and S1688, as interpreted through the Savage decision, review these comparative highlights below.
Purpose:
- McLaren: To protect employees’ freedom to engage in Section 7 rights, assist each other, and access the Agency.
- S1688: To allow survivors of discrimination, harassment, and/or retaliation to speak about their experiences in any number of ways.
Application:
- McLaren: Applies to confidentiality and non-disparagement provisions in severance agreements that condition the receipt of severance benefits on the forfeiture of Section 7 rights.
- S1688: Applies to any provision, including non-disclosure or non-disparagement provisions, in an employment contract or settlement agreement that has the purpose or effect of concealing details relating to claims of discrimination, harassment, or retaliation.
Prohibited Provisions:
- McLaren: Prohibits any confidentiality or non-disparagement provision that may have a chilling effect precluding employees from assisting others with workplace issues or communicating with the Agency, a union, legal forums, the media, or other third parties.
- S1688: Prohibits any provision that prevents an individual from discussing – in any way – the details relating directly or indirectly to any past, present, or future claim of discrimination, retaliation, or harassment.
Protected Individuals:
- McLaren: The protections apply to current and former employees, including supervisors who are retaliated against for refusing to commit an unfair labor practice on behalf of their employer.
- S1688: The protections apply to current and former employees.
Permissible Provisions:
- McLaren: Provisions that are “narrowly-tailored to restrict the dissemination of proprietary or trade secret information[,]” and non-disparagement provisions that are “narrowly-tailored, justified . . . and limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue[.]”
- S1688: Provisions that restrict an employee from competing with the employer during or after employment, or prohibit the employee from disclosing proprietary information; and non-disparagement provisions that are narrowly drawn and limited to matters unrelated to claims of discrimination, harassment, and/or retaliation.
Employer Takeaways
S1688 is currently pending in the Senate and is expected to pass through the Legislature without significant opposition. Pending further developments, employers should ensure agreements align with the Savage decision by taking the following steps:
- Review employment contracts and settlement agreements to ensure non-disparagement provisions are narrowly-tailored and limited to matters unrelated to claims of harassment, discrimination, or retaliation; and
- Explore alternative mechanisms to protect confidential and/or proprietary information.
For takeaways on compliance with the McLaren Macomb decision, see HERE.
If you have any questions related to S1688 or need assistance reviewing your employment contracts or settlement agreements to ensure compliance with the Savage decision, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.