Choosing Substance Over Form: New Jersey Supreme Court Declares That Non-Disclosure Clauses Masquerading as Non-Disparagement Provisions Are Banned

Since certain amendments in 2019, it has been widely recognized that Section 10:5-12.8 of New Jersey’s Law Against Discrimination (N.J.S.A. 10:5-12.8) prohibits non-disclosure provisions in employment agreements or employee settlement agreements if those provisions “ha[ve] the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment” that could be disclosed by the current or former employee. 

What was slightly less apparent until recently was whether other restrictive contractual clauses labeled as “non-disparagement” provisions are enforceable, even if they have a similar effect on an employee’s permitted speech. 

This precise issue was examined and determined resoundingly in May 2024 by the New Jersey Supreme Court in the Savage v. Twp. of Neptune matter. This case involved a former police sergeant’s (Christine Savage) sexual harassment, discrimination, and retaliation claims against the Neptune Township police department. In settling these claims, the parties’ agreement included a broad but generic non-disparagement clause. 

Shortly after settlement, Ms. Savage gave a television news interview during which she stated, among other things, that the defendants had “abused [her] for eight years.” The defendants then moved to enforce the agreement on the ground that Ms. Savage’s statements violated her non-disparagement clause. Ms. Savage disagreed with the defendants’ reading of the agreement in this regard, asserting instead that the non-disparagement clause was unenforceable under N.J.S.A. 10:5-12.8. 

Finding in Ms. Savage’s favor, the New Jersey Supreme Court held, unanimously, that any contractual provision that curtails an employee’s ability to speak about the details of their discrimination, retaliation, or harassment claim, whether or not labeled as a non-disclosure clause, violates the broad prohibitions of N.J.S.A. 10:5-12.8. 

In reaching this determination, the Court focused on the plain language of the statute that bars “a provision…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).” Noting that the law’s “critical language” does not tether the statute’s restrictions to a particular type of contractual clause, the Court observed that the invocation of a “non-disclosure provision” in the law is nothing more than a shorthand reference informed only by the definition proffered in the statute itself. Thus, it covers all contractual restrictions that may limit an employee’s ability to speak freely about their claims, whether the clause is labeled as a non-disclosure provision or otherwise. 

The Court also pointed out that the law’s legislative history reflects that the primary purpose of N.J.S.A. 10:5-12.8 was to stop discriminatory and harassing conduct by ensuring that victims could discuss their claims even if they settle them. Therefore, any contractual limitation on that ability violates the intent of the law. Finally, the court also held that the attempt to salvage a prohibited non-disparagement clause by carving out statements by the employee “related to other proceedings including lawsuits” is futile. Specifically, the Supreme Court stated “[s]urvivors of discrimination and harassment have the right to speak about their experiences in any number of ways, and they can no longer be restrained by confidentiality provisions in employment contracts or settlement agreements.” Thus, is it insufficient merely to allow an employee to speak about their claims in other proceedings. They must be permitted to speak about them in all forums. 

In the wake of the Savage decision, employers in New Jersey should review their standard employment and settlement agreements to make sure that there are no non-disclosure obligations hidden in other clauses. In particular, they should consider their non-disparagement provisions to make sure that they do not inadvertently curtail speech that is protected by N.J.S.A. 10:5-12.8. Moreover, as New Jersey’s law is not unique, and there is an ever-growing list of states with some restriction on non-disclosure and non-disparagement clauses, employers across the country should consider and be ready to confront these same issues.