Although the COVID-19 pandemic has occupied a preeminent place in all of our minds for the past two years, it was not that long ago that the #MeToo movement swept the nation, forcing employers and employees to examine new—yet somehow also old—issues of discrimination, retaliation, and harassment in the workplace.
From a cultural standpoint, #MeToo went viral and spread quickly. From a legal standpoint, however, change has been slower. Five years later, several states have enacted legislation in direct response to the #MeToo movement.
One of the states to act in direct response to #MeToo was New York, which we first wrote about here. Since then, a number of states have followed New York’s lead, and while each state’s law has different bells and whistles, they all have provisions regarding how sexual harassment/discrimination can be released (if at all) via settlement agreements or similar releases.
For example, in Maryland, employment-based agreements cannot waive any substantive or procedural right or remedy for a future sexual harassment claim or a future claim of retaliation for reporting or asserting a right in connection with sexual harassment. Moreover, Maryland employers cannot take any adverse action against an employee who fails or refuses to enter into any agreement waiving such rights or remedies.
Similarly, in Washington, any provision in an employment agreement that requires an employee to waive any right to publicly pursue an anti-discrimination claim or cause of action or requires an employee to resolve discrimination claims in a confidential dispute resolution process is void and unenforceable.
In New Jersey, any provision in an employment agreement or settlement agreement that has the purpose or effect of concealing details of discrimination, retaliation, or harassment is generally deemed unenforceable and against public policy. However, the New Jersey law against discrimination does not expressly prohibit confidential settlement terms (including severance or settlement amount). To that end, any settlement agreement in New Jersey resolving a discrimination, retaliation, or harassment claim must include a bold, prominently placed notice that, although the employer and employee agree to keep the settlement and underlying facts confidential, that provision in the agreement is unenforceable against the employer if the employee publicly reveals enough details of their claim such that the employer is reasonably identifiable.
Employer Takeaways: The moral of the story is that COVID-related employment issues are not the only rapidly developing areas of law of which employers should be aware. The requirements and prohibitions for settlement and severance agreements regarding discrimination, retaliation, and harassment claims are state-specific and continually evolving. Employers with locations in multiple states and/or employees working throughout the country should regularly consult their legal counsel regarding whether and to what extent confidentiality or non-disclosure provisions are permissible in severance or settlement agreements, particularly concerning discrimination, retaliation, and harassment claims, as well as making sure that they stay abreast of any other important state-law differences that may apply to severance or settlement agreements in a given state.