The Legality of Non-Disparagement Clauses
in Separation Agreements

Employee separation agreements routinely contain non-disparagement clauses. This is a provision under which the parties agree to refrain from making statements or causing others to make statements regarding the parties’ past negative behavior that, if known, would tend to impugn the other parties’ reputations.

In 2019, in response to the “#MeToo” movement, the New Jersey Legislature amended the New Jersey Law Against Discrimination (NJLAD)[1] by adding section 12.8(a), which requires that:

A provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment (hereinafter referred to as a “non-disclosure provision”) shall be deemed against public policy and unenforceable against a current or former employee (hereinafter referred to as an “employee”) who is a party to the contract or settlement. If the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable, then the non-disclosure provision shall also be unenforceable against the employer.

On May 7, 2024, the New Jersey Supreme Court decided Christine Savage v. Neptune Township,[2] in which it considered whether a “non-disparagement” clause contained within the parties’ settlement agreement (agreement) violated section 12.8(a) (above) rendering the clause both illegal and unenforceable because it violates public policy. This is a significant decision in the public employment sphere as it must be a consideration in all employee discrimination settlements.

Christine Savage (Savage) became a police officer in the Neptune Police Department (Neptune) in 1998. In 2013, she sued the police department and others alleging sexual harassment, discrimination, and retaliation under the NJLAD. The parties entered into a settlement agreement in 2014 which indicated that  Savage was to be promoted to sergeant, and Neptune was required to provide appropriate training. In April 2016, Savage filed a second lawsuit, alleging that Neptune violated the settlement agreement by subjecting her to “intensified” harassment, discrimination, and retaliation based on sex under the NJLAD, the State Civil Rights Act, and the State Constitution. Savage alleged that the police department and others subjected her to unfair assessments, arbitrary internal affairs investigations, discriminatory work assignments, discriminatory performance standards and evaluations, and more stringent oversight, scrutiny, and monitoring than her male counterparts. Savage also claimed that Neptune engaged in these tactics to promote men over women. The parties entered into a second settlement agreement in 2020. The 2020 agreement included the following:

The parties agree not to make any statements written or verbal, or cause or encourage others to make any statements, written or verbal regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party. The parties agree that this non disparagement [sic] provision extends to statements, written or verbal, including but not limited to, the news media, radio, television, ... government offices or police departments or members of the public. 

On August 11, 2020, NBC’s New York, Sarah Wallace interviewed Savage. During the interview, Savage told Wallace that she felt vindicated through her success in settling the second lawsuit because she has been able to maintain her integrity and rank. Neptune was unable to fire or demote her based on “bogus” disciplinary charges. Neptune had placed her on unpaid leave in 2018, based on a psychological examination declaring her unfit for duty but it refused to reveal the details used to support this finding. Savage also said she believed that women in the Neptune Police Department will continue to have an uphill battle to obtain promotions.

Following the interview, Neptune filed a motion to enforce the agreement’s non-disparagement provision. The trial court granted the motion finding that N.J.S.A. 18A:10:5-12.8(a), only barred the use of non-disclosure and confidentiality agreements in discrimination, intimidation, and harassment cases. The trial court ordered Savage to abide by the agreement and awarded Neptune attorney’s fees.

Savage appealed; the Appellate Division affirmed in part, and reversed in part, finding that the non-disparagement clause is enforceable, but that Savage did not violate it.[3] The Appellate Division strictly interpreted N.J.S.A. 18A:10:5-12.8(a) concluding that the statute only applies to non-disclosure provisions and not non-disparagement provisions. In so holding, the Appellate Division relied upon Black’s Law Dictionary (Black's) for support.  Black’s defines “[a] nondisclosure or confidentiality clause [as] a ‘clause prohibiting the parties to an agreement from disclosing to nonparties the terms of the agreement and, often, anything related to the formation of the agreement.’”  The Appellate Division opined that if the Legislature had intended to prohibit non-disparagement clauses it could have done so.[4] 

The New Jersey Supreme Court granted certification of Savage’s appeal. Therein the issue on appeal was whether the parties’ non-disparagement provision which barred Savage and Neptune from “mak[ing] any statements… regarding the past behavior of the parties, which… would tend to disparage or impugn the reputation of any party,” prevented Savage from giving the Sarah Wallace interview or making other public statements about her case.[5]

The New Jersey Supreme Court disagreed with the Appellate Division and held that the NJLAD protects Savage’s interview statements.[6] The Court reasoned that N.J.S.A. 10:5-12.8(a), renders the Savage non-disparagement clause unenforceable as it is against public policy. [7]

The Court further explained that the NJLAD is remedial legislation and is thus intended to be liberally construed to fulfill its purpose of protecting the public’s interest in maintaining discrimination-free workplaces. The Court identified the section’s pivotal language as the phrase that prohibits provisions in settlement agreements that have “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.” To that end, the Court explained that the section employs a “shorthand reference” to “non-disclosure provision,” but, the phrase “non-disclosure provision” draws its meaning from the words it refers back to in the same section of the law itself, and not from outside sources like Black’s Law Dictionary. Thus, if a non-disparagement provision has the effect of concealing details related to discrimination, retaliation, or harassment, the provision is against public policy and not enforceable.

The Court added while acknowledging that the legislative history is not essential to its conclusion, the section’s history reinforces the plain meaning of the statute. Section 12.8(a) was adopted amid the “#MeToo” movement and the Legislature intended it to be a meaningful step in rendering non-disclosure agreements in sexual abuse and harassment cases unenforceable against employees who are survivors. The proposed bill was targeted to ensure that each time this kind of harassment occurs “it will not be done in the dark of night, and the perpetrator will not be free to do it again and again.”[8] The Court held that the Savage non-disparagement provision violates the plain language of section 12.8(a).[9]

Not all non-disparagement clauses are unenforceable, theoretically, a non-disparagement provision can be narrowly constructed to prevent parties from disclosing details about personal lives or matters unrelated to discrimination. See Dill v. Yellin et al.[10]

Savage provides significant insight into the extent to which settlement agreements can protect school boards from an employee revealing details of employee discrimination settlements and, in turn, informs employees who enter into such agreements of their right to discuss their employment experience as a discrimination survivor. It is anticipated that administrators will be working closely with their board attorneys to guide districts through such a settlement process.