Appellate Court Affirms that New Jersey’s Arbitration Ban Can’t Trump Federal Arbitration Act

When new laws — or amendments to existing laws — pass, there is a general sense that it creates new hard-and-fast rules. But that is not always the case. Laws and amendments are constantly being tested, and this was notably seen last week, when a 2019 amendment to the New Jersey Law Against Discrimination came up against an employee’s lawsuit over an arbitration agreement.

The state of New Jersey amended its Law Against Discrimination (NJLAD) in 2019 to ban agreements requiring employees to arbitrate employment discrimination claims that it covers. Despite that, when Gilbert Antonucci filed an employment discrimination suit against his employer, Curvature Newco, Inc. under the terms of the NJLAD, his case was dismissed and he was ordered to submit to arbitration by a trial court. The court’s decision was based on their finding that he had been sent the company’s Handbook and Arbitration Agreement and had agreed to it.

Mr. Antonucci appealed this decision, arguing first that he had not agreed to the arbitration clause within the company’s handbook as well as that the arbitration clause was pre-empted by the amendment to NJLAD passed in March of 2019. Upon review, the Superior Court of New Jersey’s Appellate Division upheld the lower court’s decision. In doing so they more closely examined the question of whether the terms of the New Jersey Law Against Discrimination could outweigh the terms of an arbitration agreement governed by the Federal Arbitration Act, as this contract was.

The court first confirmed the conditions under which Mr. Antonucci was sent the terms of the arbitration agreement and that its terms were considered assented to. Following that discussion, they discussed whether the amendment to the NJLAD was pre-empted by the FAA, and they determined that it was. This decision was largely based upon the ability of employees who believe that their rights under NJLAD to pursue those rights. Though remedies are not available in court, they can still be the subject of negotiation within an arbitration setting, and therefore the rights offered under NJLAD are not eliminated.

Interestingly, the court noted that this preemption by agreements under FAA would not preempt the NJLAD terms if the terms of an FAA agreement specifically contradicted the terms of the NJLAD. For example, if an FAA agreement provided less time for an employee to take action than the time allowed by the NJLAD, the judges indicated that the NJLAD terms would be favored.

Arbitration agreements are increasingly used by corporations looking to defend themselves against lawsuits. If you are concerned about actions that have been taken against you and need more information about your rights under the New Jersey Law Against Discrimination, contact our employment discrimination law firm today.

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