Is A Non-Disparagement Clause in Employment Contracts Enforceable Under New Jersey Law?

BY CHRISTOPHER P. FIORE, ESQUIRE

What is a non-disparagement clause and if one is included in an employment contract can it be enforceable?

A non-disparagement is a clause which specifically enjoins a departing employee from making any statements that could possibly either harm the employer’s reputation, goodwill or malign the owner. A Non-disparagement clause is different from a non-disclosure clause.

This distinction was made clear in Savage v. Township of Neptune No. A-1415-20 (App. Div. May. 31, 2022).

This anticipated ruling came after the March 18, 2019 amendment to the New Jersey Law Against Discrimination (“NJLAD”) preventing the enforcement of non-disclosure agreements in employment contracts and settlement agreements. In Savage v. Neptune, the New Jersey Appellate Division has now made clear that non-disparagement provisions are not included within the prohibition against non-disclosure provisions in employment contracts and settlement agreements.

The Appellate Division’s ruling preserves an employer’s ability to include non-disparagement provisions in employment contracts and settlement agreements and enforce them against breaching current or former employees. When drafting employment or settlement agreements, employers should consult with capable legal counsel about strategies to ensure the enforceability of any non-disparagement provisions contained in those contracts.