New Jersey Supreme Court Limits Non-disparagement Agreements in Settlement of Discrimination Lawsuits

New Jersey employment lawsuits alleging discrimination, harassment or retaliation are often resolved in settlement agreements.  The New Jersey Supreme Court recently clarified the permissible scope of non-disparagement agreements in those settlement agreements in the case of Savage v. Township of Neptune.

 

Background

Christine Savage was a police officer with the Neptune Township Police Department.  She filed a lawsuit against the Department and certain individuals in 2013 alleging that they violated the New Jersey Law Against Discrimination by sexually harassing her, discriminating against her because of her gender, and retaliating against her because of her complaints of discrimination.  The lawsuit was settled in 2014.  As part of the settlement the Township agreed to give Savage access to training and promote her to sergeant.

In 2016 Savage filed another lawsuit, claiming that the Township and individual defendants violated the settlement agreement and intensified their discrimination, harassment and retaliation.  The second lawsuit was settled in 2020.  Savage was to remain employed so she could reach twenty-five years and achieve full retirement, and receive $248,560.70 in damages.

The second settlement included a non-disparagement provision, which provided:

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.

Shortly after the case settled, Savage participated in two interviews with a reporter which were broadcast on a local television news report.  The interviews included the following dialogue.  The Township contended that the highlighted passages violated the non-disparagement provision of the settlement agreement.

Reporter (introducing segment): We have an I-Team exclusive update tonight. A major win for a former police sergeant who sued Neptune Township in central New Jersey for sex discrimination. Now a settlement. Investigative reporter Sarah Wallace has covered the legal battle for years and joins us now with details of a closing chapter.

Savage: I feel vindicated.

[Reporter Sarah] Wallace: Neptune Township’s only female police sergeant, Christine Savage, claiming a legal victory. The 46-year-old agreeing to settle a contentious sexual discrimination lawsuit which she first filed against her superiors in 2013.

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.

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

Savage: I never asked for special treatment, I just asked for the same treatment.

Wallace: In 2018, she was put on unpaid leave after being found unfit for duty during a psych exam. The sergeant claims it was a set up.

Savage: They wouldn’t tell me what it was that determined me unfit.

Wallace: She spoke out then for the first time to the ITeam.

Savage: I’m being financially choked out.

Wallace: Savage fought back in court. The result, one hearing after another, and a back and forth series of other psych exams.

Savage: But I passed 5 fitness for duties, 5, and at no point in time was I put back to work.

Wallace: She never got back in uniform, but the Township finally agreed to put her back on the payroll and then a settlement offer for this veteran who will retire with 25 years on the job, with full benefits, back pay and all disciplinary charges dismissed. The Township denies any improper conduct.

Wallace: What do you say to other whistleblowers?

Savage: Stand your ground. Don’t submit.

Wallace: I’ve seen the toll it has taken on you over the years. Was it worth it?

Savage: It is worth it. If you have the integrity, and the strength to stand your ground and stand up for what’s right then that’s worth its weight in gold.

Wallace: But Savage also believes women will continue to face an uphill battle for equal promotions within her department.

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

Wallace: Because?

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

Wallace: 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.

The Township filed a motion to enforce the settlement agreement in the Law Division of the Superior Court of New Jersey.  The judge granted the motion.  The judge found that while the New Jersey Law Against Discrimination barred non-disclosure and confidentiality provisions in settlement agreements, it did not prevent non-disparagement agreements.  The judge denied the Township’s request for damages, but awarded it $4917 for the attorneys fees it incurred in enforcing the agreement.

Savage appealed to the Appellate Division of the Superior Court.  The Appellate Division held that the non-disparagement agreement was valid and did not violate the Law Against Discrimination, but that Savage had not violated it.  It therefore vacated the judge’s award of counsel fees.  Savage then appealed to the Supreme Court of New Jersey, arguing that the Appellate Division was wrong that the non-disparagement was valid.  Numerous organizations supported Savage’s position, as did the New Jersey Attorney General.

 

The New Jersey Law Against Discrimination

The New Jersey Law Against Discrimination bars harassment or discrimination because of the following characteristics of an employee or applicant for employment:

race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or because of the liability for service in the Armed Forces of the United States or the nationality of any individual, or because of the refusal to submit to a genetic test or make available the results of a genetic test to an employer….

The Law Against Discrimination also bars retaliation for complaints of discrimination or harassment which have a reasonable basis.

In 2019, the New Jersey Legislature amended the Law Against Discrimination to include the following provision prohibiting confidentiality agreements which barred disclosure of allegations of discrimination, retaliation or harassment.  That provision, section 12.8, states that:

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 (hereinafter referred to as an “employee”) who is a party to the contract or settlement. If the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable, then the non-disclosure provision shall also be unenforceable against the employer.

The crux of the case was interpretation of this provision.

 

The Supreme Court Holds that Non-Disparagement Agreements Cannot Bar Disclosure of Harassment or Discrimination Claims

The Supreme Court explained that non-disparagement agreements can be narrowly drawn so that they do not impinge on the Law Against Discrimination.  For example, an employee could agree not to disparage her boss by saying that he drank heavily.

However, the purpose of section 12.8 was to ensure that allegations of discrimination and harassment were not buried, to further the purpose of the Law Against Discrimination to eradicate the cancer of discrimination.  The Supreme Court explained that disclosing the details of an employer’s discrimination, harassment or retaliation would of course “tend to disparage or impugn” its reputation, and therefore be disparaging.  However, it was exactly these types of statements that the Legislature wanted to have disclosed.

As the court explained: “Survivors 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.”

The Supreme Court therefore held that: “We find that the non-disparagement clause conflicts with the LAD in that it encompasses and would bar speech the statute protects – ‘details relating to a claim of discrimination, retaliation, or harassment.’”

 

The Takeaway

Settlement agreements may contain non-disparagement provisions, but they must be narrowly tailored so that they would not prohibit disclosure of details relating to claims of discrimination, retaliation or harassment.

 

Contact Us

Our New Jersey employment attorneys represent employees and employers in all aspects of New Jersey employment law, including claims of illegal harassment and discrimination, and retaliation for complaints of discrimination or harassment, or whistleblowing.  Call us at (973) 890-0004 or fill out the contact form on this page to schedule a consultation with one of our New Jersey employment lawyers.  We can help.