settlement agreement

Last week, in Savage v. Township of Neptune, the Appellate Division ruled that a 2019 amendment to the New Jersey Law Against Discrimination (“LAD”) does not prohibit parties from entering into non-disparagement clauses.

The Appellate Division’s opinion involved Christine Savage, a Sergeant for the Township of Neptune Police Department. Sgt. Savage brought an employment discrimination case against Neptune, Police Director Michael J. Bascom, Police Chief James M. Hunt, in which she alleged they engaged in sexual discrimination, harassment, and retaliation in violation of the LAD, the New Jersey Civil Rights Act (“NJCRA”), and the free speech provision of the New Jersey Constitution.

Sgt. Savage eventually settled her case. The settlement agreement included a mutual non-disparagement provision which prevented the parties from making any statements “regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party.”

It has become extremely common, if not standard practice, for employers to include non-disparagement clauses in settlement agreements and severance packages they offer to their former employees. These provisions prohibit employees from saying anything negative about their former employers. They are extremely broad, since they prohibit true but negative statements and opinions. In addition, they typically prohibit employees from saying anything negative not just about the company itself, but also about its current and previous owners, directors, officers, employees, subsidiaries and parent companies.

The unfortunate reality is that many employees who sign severance agreements either have not read the entire agreement or do not understand or appreciate many of its provisions. Even individuals who realize they are being asked not to say anything negative about their former employers generally have no choice but to agree if they want the severance pay and other benefits that have been offered to them. Of course, for someone who has recently lost his or her job it can be difficult to reject a severance offer over something like a non-disparagement clause. As a result, employees regularly agree not to disparage their former employers.

A recent article in the New York Time, Laid-Off Americans, Required to Zip Lips on Way Out, Grow Bolder, indicates that there is a growing backlash against non-disparagement clauses. For example, it indicates that several prominent Democrat and Republican members of Congress have questioned the widespread use and misuse of non-disparagement agreements.

Articles Tagged with settlement agreement

Non-Disparagement Clauses Do Not Violate New Jersey Law Against Discrimination

Backlash Against Non-Disparagement Clauses