Bag the Gag Provision: New Jersey Is the Latest State to Restrict Non-disclosure Agreements in SettlementsYou finally settled that tough discrimination or harassment claim. Now you just need to ink the settlement agreement, and obviously it will include a standard non-disclosure clause to prevent your claimant from ever talking about the events or settlement amount ever again – right? Well, depending on the state you are in, not so fast. The #MeToo movement and attention on non-disclosure agreements in the wake of the President Trump-Stormy Daniels story, has led several states – New Jersey being the latest – to prohibit non-disclosure agreements (NDAs).

New Jersey’s Law

New Jersey’s law states that NDAs with “the details relating to a discrimination, retaliation, or harassment claim” are unenforceable as against public policy. The law goes beyond other states’ laws in that it is not limited to only sexual harassment, assault, or sex discrimination claims, but prohibits NDAs about any and all discrimination, retaliation, or harassment complaints.  The statute extends to the underlying circumstances that gave rise to the claim along with the settlement or separation agreement.

There are two exceptions to the New Jersey statute: (1) Noncompetition agreements are allowed, and (2) NDAs that prohibit disclosure of proprietary information, including trade secrets, business plans, and customer information, are permitted. Violating the NDA limitation could result in the employer paying the employee’s attorney’s fees and costs in a subsequent enforcement action.  The law provides a private right of action and specifically prohibits retaliation against employees who refuse to enter into an NDA that would violate the limitation.

Other States’ Laws

New Jersey is not the only state to pass such NDA restrictions. Others include:

  • New York prohibits confidentiality clauses in settlement agreements for sexual harassment claims, unless the complainant consents after being given 21 days to consider such terms (which some say makes the new prohibition meaningless). New York also prohibits mandatory arbitration clauses for sexual harassment claims in employment agreements.
  • California likewise prohibits NDAs in settlements for cases involving sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. California’s law went into effect January 1, 2019, and does allow confidentiality for the settlement amount.
  • Maryland’s new state law that went into effect in October 2018 focuses more on public disclosure. In Maryland, employers with 50 or more employees must disclose the number of settlements made after a sexual harassment allegation, the number of settled allegations of sexual harassment against the same employee, and the number of settlements of sexual harassment complaints that included a non-disclosure provision. This information must be provided to the Maryland Commission on Civil Rights and will be publicly available.
  • Tennessee prohibits employers from requiring an employee or prospective employee to sign or renew a non-disclosure agreement regarding sexual harassment in the workplace as a condition of employment, for any NDA executed or renewed after May 15, 2018.


So Can You Have a NDA or Not?

Almost every employer or defendant who settles a civil action (whether in litigation or prior to litigation) wants a confidentiality provision for a host of reasons. Proponents of these prohibitions contend that NDAs can protect a serial abuser or harasser from discovery without ever fixing any underlying problem. Last year Congress amended the tax bill to make any settlement or payment related to sexual harassment or abuse that was subject to an NDA, or any attorney’s fees related to such payment, not taxable – an amendment that was described in one of our previous posts. Barring non-disclosure agreements, however, may have the chilling effect of not allowing a claimant to settle if the alleged offender cannot have the allegations or settlement terms designated as confidential.

Depending on where you are settling a case, employers should certainly check state limitations on confidentiality and NDAs. With New Jersey now joining the states with such prohibitions, others may follow. If, as an employer, a state limitation is in play you need to weigh the inability to get confidentiality as part of the decision-making process to settle. What was once an assumed and essential clause to any settlement agreement may not be in the future.

Musing My Religion: Will the Supreme Court Clear Up Issues on Requested Religious Accommodations?Although it does not happen often, most employers have had to consider what to do when an employee says he or she cannot work a shift because of a religious belief. Under Title VII, an employer must offer a reasonable accommodation to address any conflict between an employee’s sincerely held religious belief and his or her work obligations (unless the accommodation incurs an undue hardship). A somewhat common scenario is an employee who cannot work on the Sabbath and requests the company to change his or her shifts or assignments to avoid Sabbath-day work. Many employers have addressed this issue by allowing that employee to find a voluntary substitute instead of changing that employee’s shift. But what happens when a substitute is not available? In Patterson v. Walgreen Co., the Supreme Court was recently asked to weigh in on this consideration.

The Facts

Mr. Patterson, a Seventh Day Adventist who observes a Friday evening to Saturday evening Sabbath, was a training instructor for Walgreens’ call centers. He requested a religious accommodation—asking that Walgreens not make him work on his Sabbath. Walgreens accommodated his request by not scheduling regular trainings on Friday and Saturday and allowing someone to voluntarily swap shifts to cover any emergency shifts. While this accommodation appeared to work generally, Mr. Patterson’s Sabbath observance caused him to miss a mandatory training session in 2008. Then, three years later, Mr. Patterson did not find a replacement for an emergency training, so he was terminated after passing up Walgreens’ offer for him to transfer to his former position as a customer care representative that would arguably have allowed for more flexibility.

Mr. Patterson filed a lawsuit alleging that Walgreens discriminated against him because of his religion and its failure to provide a reasonable accommodation. Walgreens responded that it provided two reasonable accommodations:  Mr. Patterson could find a coworker to swap shifts or he could transfer to his former position. The Middle District of Florida granted summary judgment for Walgreens, concluding that it reasonably accommodated Mr. Patterson. On appeal, the Eleventh Circuit held that

“Walgreens met its obligations under Title VII by allowing Patterson to arrange a schedule swap with other employees when they were willing to do so.”

So Why Is the Supreme Court Involved?

Mr. Patterson asked the Supreme Court to take his case, arguing that Walgreens’ accommodation did not “eliminate” the conflict, as required by the Supreme Court’s 1986 case, Ansonia Board of Education v. Philbrook. It appears that not all courts agree about what Ansonia requires. At least four circuits (the Second, Sixth, Seventh, and Ninth) have recognized that a religious accommodation to enable an employee to honor the Sabbath must completely eliminate the conflict or it is not reasonable. Although, in those cases, the employers did not offer voluntary shift swaps. Two other circuits (the Eighth and Tenth) have allowed the jury to determine whether the accommodation appropriately resolved the conflict, including when an employee was unable to get a substitute for the Sabbath shift and was eventually terminated. Finally, the First and Fourth Circuits have upheld accommodations, including shift swaps, as reasonable that did not eliminate the hardship completely—much like the Eleventh Circuit here.

What Does This Mean for Employers?

Allowing an employee to voluntarily swap shifts with a coworker to accommodate his or her sincerely held religious belief might not be enough for now. Until the Supreme Court rules, employers should check the law in their circuit. Additionally, here are a few other considerations:

  • When faced with a request for a religious accommodation, consider whether shifts could be rotated without true undue hardship—including hardship on other employees. Have you made similar shift accommodations for other reasons? How often will this shift change affect other employees? All of that should be considered.
  • If alternate shifts are not possible, and the employee is unable to find a replacement for a shift, think before you terminate. Consider whether any other alternative arrangements can reasonably be made such as offering overtime wages to the covering employee for that shift, advancing vacation days, or delaying discipline for missing the shift. You might ultimately reject all of the options as undue hardships but you should at least consider them.
  • The Department of Labor has encouraged employers to provide a “central file” where employees can view other employees’ schedules to encourage easy swapping.
  • Is providing the schedule change when the employee cannot find a substitute truly an undue hardship? The undue hardship standard in this area of the law is not as onerous as under the Americans with Disabilities Act but you will still have to establish a hardship. In fact, another issue in Patterson is whether there was actually any undue hardship because Walgreens was able to delay the training that Mr. Patterson missed.

The good news is that this uncertainty may not last long. More than five briefs have been submitted to the Supreme Court supporting Mr. Patterson’s petition, and on March 18, the Supreme Court asked the solicitor general to weigh in—signaling that the Court may be interested in deciding this issue.

Showdown at Title VII Corral: Supreme Court to Weigh in on Sexual Orientation and Transgender DiscriminationIs discrimination against an employee because of sexual orientation or transgender status a violation of Title VII? The EEOC previously took the position that Title VII covers those statuses but the Trump administration has not followed suit. Accordingly, as of now, it may depend on where you live.

In 2017 and 2018, the Second, Sixth, and Seventh Circuits ruled that adverse employment actions based on a person’s sexual orientation was sex discrimination under Title VII. That means that federal courts in 10 states (Connecticut, New York, Vermont, Kentucky, Michigan, Ohio, Tennessee, Illinois, Indiana, and Wisconsin) have precedent that Title VII prohibits sexual orientation discrimination. However, during that same timeframe, the Fifth and Eleventh Circuits ruled otherwise, so the federal courts in six states (Louisiana, Mississippi, Texas, Alabama, Florida and Georgia) have precedent that sexual orientation is not a protected status under Title VII. To add yet another layer in this arena, many states and municipalities have adopted their own laws to prohibit discrimination based on sexual orientation and gender identity.

Enter the Supreme Court

The U.S. Supreme Court may decide once and for all whether Title VII covers sexual orientation and transgender status. The court has agreed to consolidate two cases on the sexual orientation issue: Bostock v. Clayton County, Georgia, which found that sexual orientation was not covered, and Zarda v. Altitude Express, Inc., which found that it was covered. In Bostock, Gerald Bostock, a child welfare services coordinator, alleged he was terminated a month after someone made disparaging comments about his sexual orientation and his playing in a gay softball club. In Zarda, Donald Zarda, a skydiving instructor, alleged he was terminated after he told a customer he was gay. The court will consider whether Title VII’s prohibition of discrimination “because of…sex” includes discrimination based on sexual orientation.

In a similar vein, the court has agreed to hear R.G. & G.R. Harris Funeral Homes v. EEOC, a Sixth Circuit case presenting the issue of whether Title VII covers discrimination based on transgender status. In this case, Aimee Stephens alleged she was terminated from her job after she announced she was a transgender woman and would start wearing women’s clothing to work. In this case, the EEOC is arguing that Ms. Stephens’ termination was a violation of Title VII’s prohibition of sex discrimination because of her transgender status but also because she failed to conform to a gender stereotype.

What Now?

Until the Supreme Court decides, the safest course is to make decisions based on reasons that are not related to a person’s sexual orientation or gender identity.