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Non-Disparagement Clauses: Savage v. Township of Neptune

by | Jun 6, 2023 | Employment Law |

The NJ Law Against Discrimination prohibits an employer from seeking confidentiality clauses with respect to the underlying facts and details of the harassment, discrimination and/or retaliation. N.J.S.A. 10:5-12.8(a).  How does this work in the context of non-disparagement clauses whereby the employee is required not to say anything negative or disparaging about the employer or any of the individuals involved in the case?   In May 2022, the New Jersey Appellate Division answered this question in Savage v. Township of Neptune.

Settlement agreements and severance agreements almost always include a confidentiality clause that focuses on disclosure of the terms and conditions of the settlement itself but does not cover the underlying facts of the case.  This type of confidentiality clause does not violate the NJ Law Against Discrimination prohibitions.  Similarly, these agreements almost always contain a non-disparagement clause whose focus is on protecting the reputation of the company and the individuals involved in the fact pattern.   It is entirely possible that a non-disparagement clause would prevent an employee from talking about the underlying facts of their case, which the company might argue would tend to cast the company in a negative light.  

Non-Disparagement Clauses in Settlement Agreements

In Savage, the trial court found that the employee’s televised interviews about what she has experienced at work violated the non-disparagement provisions of the settlement agreement.  The Appellate Division disagreed.  They found that non-disparagement provisions were valid and enforceable but that in this instance, where the employee’s interviews had taken place before the settlement agreement, the comments could not be deemed to violate the settlement agreement.  

Employees should beware that courts will enforce non-disparagement clauses in settlement agreements but that there is a fine line between a disparaging comment and a comment protected from confidentiality by the NJ Law Against Discrimination.

While comments about the employer and the fact pattern underlying the case are going to be disparaging, they will not be deemed to violate a disparagement clause if they pre-dated the signatures on the settlement agreement.  However, the more important takeaway from this case is to avoid making comments about the employer after you have signed the settlement agreement so as to effectuate the spirit and intent of the settlement, i.e. full and final closure between the parties.  The cautionary message from Savage is that these comments may just lead to more litigation, something the employee was trying to avoid by settling the case.

If you need help navigating confidentiality, non-disparagement clauses, and severance agreements, contact Hamilton Law Firm today.