The New Jersey Legislature is considering a bill with potentially far-reaching implications for employment contracts and agreements resolving discrimination, harassment or retaliation claims. Bill S121/A1241 precludes the waiver of rights or remedies related to any claim of discrimination, retaliation or harassment in “employment contracts,” and specifies that rights and remedies under the New Jersey Law Against Discrimination or any other statute or case law can only be waived prospectively. The bill exempts collective bargaining agreements (“CBAs”) from this waiver prohibition. Therefore, CBAs that contain discrimination or harassment clauses appear to be unaffected.

While the waiver prohibition applies only to “employment contracts,” the bill’s proscription of commonly used confidentiality clauses applies to “any employment contract or agreement.” The bill does not define or explain the difference between a contract or agreement. Additionally, the bill does not clearly define what circumstances give rise to the confidentiality clause limitation, rendering unenforceable any provisions designed to conceal “the details relating to a claim of discrimination, retaliation or harassment.”

The bill also contains an anti-retaliation provision, protecting applicants and/or employees who refuse to enter into an agreement or contract that contains a prohibited provision.

The bill provides for a two-year period for employees to bring claims in the New Jersey Superior Court, and prevailing employees would be entitled to their attorney’s fees and costs. In addition to the typical fee-shifting structure, an employer would also be liable for the fees and costs that an employee incurs if the employer attempts to enforce a prohibited provision of an agreement or contract (i.e., a confidentiality clause).

If enacted as drafted, the law would take effect immediately and apply prospectively.