A bill in the New Jersey State Senate would bar an employer from entering into an agreement for severance payments with an employee “which results in the employee releasing any claims, or barring any potential claims in the future, that the employee may have against the employer regarding gender discrimination or harassment.” The bill, S2535, also deems any provisions in a severance agreement requiring the release of gender claims “void and unenforceable.” If enacted, the bill will affect Garden State employers and employees significantly.

Generally, the purpose of severance is to provide both parties, employer and employee, closure. The employer makes a monetary payment in exchange for a release of any and all potential claims a former employee may assert. S2535 would remove the primary motivation for an employer to make severance payments to separating employees — to gain full closure. Practically, if enacted, S2535 would discourage employers from offering severance payments to separating employees.

The bill, which would amend Title 34, is in its preliminary stages and still must go through committee and the typical legislative process. Please contact Jackson Lewis with any questions. We will provide updates on the status of the bill as it proceeds.