Last week, New Jersey Governor Phil Murphy signed a bill that may be an attempt to ban pre-dispute arbitration agreements for workplace sexual harassment and discrimination claims. Senate Bill 121 states “A provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable.” In addition, the bill amending the New Jersey Law Against Discrimination prohibits employers from requiring a worker to sign a nondisclosure provision “relating to a claim of discrimination, retaliation, or harassment.”
Senate Bill 121 took effect immediately upon signing and is not retroactive. The terms of the new law will “apply to all contracts and agreements entered into, renewed, modified, or amended on or after the effective date.” Any person who attempts to enforce a provision that is “deemed against public policy and unenforceable” under the law “shall be liable for the employee’s reasonable attorney fees and costs.” The bill does not apply to collective bargaining agreements.
Although the text of the new law does not specifically address arbitration, its underlying goal appears to be preserving an employee’s right to trial. It may also be designed to eliminate collective action waivers included in an employment contract. To the extent the New Jersey law attempts to bar arbitration, it is likely preempted by the Federal Arbitration Act.