Earlier this year, in McLaren Macomb, 372 NLRB No. 58, the National Labor Relations Board (“NLRB”) held that confidentiality and non-disparagement provisions in a severance agreement violated the National Labor Relations Act (“NLRA”). In subsequently issued guidance about the decision, the NLRB emphasized that its decision was only reinstating previous precedent that employers could not prohibit workers from exercising Section 7 rights. Per the NLRB’s guidance, broadly worded confidentiality and non-disparagement provisions are unlawful and unenforceable, but certain narrowly tailored provisions might still be permissible. The NLRA covers most workers, including those who are not unionized, but does not cover government employees, agricultural laborers, domestic workers, and supervisors (with some limited exceptions).
For workers in New Jersey, the New Jersey Law Against Discrimination (“NJ LAD”), N.J.S.A. § 10:5-12, prohibits enforcement of confidentiality or nondisclosure provisions in employment contracts or settlement agreements if the provision has the purpose or effect of concealing the details related to a claim of discrimination, retaliation, or harassment. This provision applies to all contracts and agreements entered into, renewed, modified or amended on or after March 18, 2019. Any provisions that violate this statute are considered void as against public policy, meaning that they are unenforceable.
For workers in New York, N.Y. Gen. Oblig. Law § 5-336 prohibits any employer from including a confidentiality agreement that would prevent disclosure of the underlying facts and circumstances of discrimination and harassment claims unless it is the employee’s preference. Unlike the NJ LAD, the New York statute does not state that such clauses are void as against public policy.
We are still regularly seeing agreements with provisions that would likely violate NLRB guidance or state statutory provisions. Knowing your rights, and having a strong advocate on your side, is important prior to signing any employment agreement or settlement agreement.