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FMG Law Blog Line

Say Goodbye to Arbitration; Say Goodbye to Confidentiality?

Posted on: December 20th, 2017

By: Christopher M. Curci

On December 4, 2017, New Jersey state Senator Loretta Weinberg introduced Senate Bill S-3581. The bill aims to (1) eliminate arbitration provisions in employment agreements related to discrimination, retaliation, and harassment claims, and (2) eliminate confidentiality clauses that are commonly found in employment settlement agreements for those claims.  The bill would bring significant change in the handling of employment litigation in New Jersey.

A recent study by the Economic Policy Institute found that 54% of non-union employers have mandatory arbitration procedures for employment related disputes. In 1992, that number was a mere 2%.  The meteoric rise in arbitration agreements is because employers consider arbitration less costly than federal or state court litigation, and because arbitration eliminates the risk of “runaway jury” awards to plaintiff-employees.  Conversely, opponents of mandatory arbitration assert that such agreements prohibit employees from having access to their full legal rights under federal and state employment laws.

Regarding confidentiality clauses, such clauses are almost always found in settlement agreements between employers and employees. However, the recent explosion of high-profile allegations of sexual harassment and the #MeToo social media movement has started a dialogue regarding whether confidentiality clauses should be made unlawful.  It is within this backdrop that Senator Weinberg has proposed Senate Bill 3581.

If passed, the bill would eliminate the use of arbitration for discrimination, retaliation, and harassment claims, and make it unlawful to have “confidential” settlements of such disputes. Employers should keep an eye on this bill and prepare to make necessary changes to their employment contracts and employee handbooks if the bill becomes law.  Employers should also consider the bill’s potential impact on any current or expected litigation.  Christopher M. Curci represents employers in litigation and advises his clients on all aspects of employment law.  If you need help with this or any other employment issues, he can be reached at [email protected].

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