NJ district court strikes down NJLAD's prohibition against arbitration

In early 2021, the Monmouth County Law Division found an amendment to the New Jersey Law Against Discrimination (NJLAD) that prohibits a waiver of any right or remedy available under the Act was superseded by the Federal Arbitration Act (FAA). In a separate decision on March 25, the district court followed suit and barred the state attorney general (AG) from enforcing Section 12.7 of the NJLAD, which would have invalidated arbitration agreements between employers and employees. The decision represents a significant victory for employers on the enforceability of arbitration agreements in harassment, discrimination, and retaliation cases in the state.

Facts

The New Jersey Civil Justice Institute (NJCJI) and the U.S. Chamber of Commerce filed a complaint asking the district court to declare Section 12.7 of the NJLAD to be preempted by the FAA. They named the state AG as a defendant and sought a ruling that would prohibit the state from enforcing the provision as it applies to arbitration agreements in employment contracts.

The NJCJI is a nonprofit whose members include small businesses, business associations, and professional organizations. The Chamber of Commerce is a business federation that advocates for its members on matters of antibusiness regulatory actions and federal arbitration law. Many of its members, some of whom operate in New Jersey, routinely enter into arbitration agreements with their employees.