NJ: Faragher/Ellerth Defense May Be Used in Sexual Harassment Suits Brought Under NJLAD

The New Jersey Supreme Court recently ruled that an employer may assert an effective and enforced anti-harassment policy as an affirmative defense in cases brought against the employer under the New Jersey Law Against Discrimination (LAD) alleging that a supervisor engaged in sexual harassment. In issuing this opinion, the state high court: (1) clarified that state courts should follow longstanding federal court guidance in Faragher v. Boca Raton and Burlington Industries v. Ellerth; and (2) expanded the definition of “supervisor.” This apparent split decision of sorts—that offers favorable law for both employers and employees—is not surprising; the New Jersey legal community already had tacitly accepted the Faragher/Ellerth defense, and the broader definition of “supervisor” is consistent with the broader scope of the LAD.
For many years post-Faragher/Ellerth and Lehman v. Toys ‘R’ Us (a seminal New Jersey Supreme Court decision), employers strived to proactively prevent harassment through strong, written policies and training, but the New Jersey Supreme Court had not formally adopted these defenses, making state court defense of employers that much more challenging. While these defenses were regularly raised, the state courts did not afford them the same force as the federal courts, which were much more willing to grant a motion under these defenses than state courts being asked to follow federal guidance.
Although in some respects the court here arguably just formalized the affirmative defenses already used in practice, the formal opinion should give these defenses teeth in state court proceedings going forward. Notably, however, this defense remains unavailable if the employer took any adverse job action against the employee.
The Aguas decision. Citing the longstanding U.S. Supreme Court Faragher and Ellerth cases, the New Jersey Supreme Court in Aguas v. New Jersey held that when an employer has “exercised reasonable care to prevent and correct promptly any sexually harassing behavior” and “the plaintiff employee unreasonably failed to take advantage of any [such] preventive or corrective opportunities,” then the employer may assert this affirmative defense. Formally availing employers of this affirmative defense will be a “powerful incentive for an employer,” the court recognized, “motivating employers to maintain effective anti-harassment policies, and encouraging employees to take prompt action against harassing supervisors in accordance with those policies.”
A caveat. The high court also stressed that these affirmative defenses are not blind or limitless, though. Such defenses are unavailable to an employer: (1) that takes “tangible” employment action against the allegedly harassed employee; or (2) “whose sexual harassment policy fails to provide ‘meaningful and effective policies and procedures for employees to use in response to harassment.”
Indeed, while the minority opinion suggests that the court’s holding allows employers to “hide behind a paper anti-discrimination policy,” the majority emphatically rejected the contention that the decision protects employers that maintain anti-harassment policies exist “in name only.” Taking pains to fend off such misconceptions, the majority emphasized: “So that the dissent’s description of our opinion does not confuse employers, employees, counsel or trial courts with respect to this pivotal issue, we restate: An employer that implements an ineffective anti-harassment policy, or fails to enforce its policy, may not assert the affirmative defense.”
“In short, the affirmative defense provides no benefit to employers who empower sexually harassing employees who take tangible employment actions against their victims, employers who fail to implement effective anti-harassment policies, and employers whose policies exist in name only.”
The underlying case. Aguas was brought by an employee of the state department of corrections (DOC) who alleged she was sexually harassed by her supervisor. The DOC defended itself by asserting that it had taken “prompt and remedial action” in response to her complaint, including undertaking a “thorough investigation.” The DOC also noted that it had a written anti-harassment policy in place, which included a procedure for reporting complaints in writing. The plaintiff had utilized this procedure successfully when raising complaints in the past, but here her only complaints against her supervisor were made orally.
Granting the DOC’s motion for summary judgment, the trial court concluded that the employer had established an affirmative defense to the claims, as the employee failed to take the requisite steps set forth in the written anti-harassment policy. The state appeals court affirmed, finding the DOC exercised due care in its investigation and agreeing with the court below that the employer established the affirmative defense. It rejected the employee’s contention that the state was liable under the agency principles of Restatement Sec. 219(2)(d), finding that she failed to show that her supervisor used his authority to control her day-to-day working environment to aid his sexual harassment of her. The New Jersey Supreme Court reversed.
Five-factor test. In analyzing the availability of the Faragher-Ellerth defense, the high court applied the five factors set forth in its Gaines v. Bellino decision and in Lehman: “[T]he existence of: (1) formal policies prohibiting harassment in the workplace; (2) complaint structures for employees’ use, both formal and informal in nature; (3) anti-harassment training, which must be mandatory for supervisors and managers, and must be available to all employees of the organization; (4) the existence of effective sensing or monitoring mechanisms to check the trustworthiness of the policies and complaint structures; and (5) an unequivocal commitment from the highest levels of the employer that harassment would not be tolerated, and demonstration of that policy commitment by consistent practice.”
“Supervisor,” defined. “Supervisor” is undefined in the LAD and, prior to Aguas, the New Jersey Supreme Court had not expressly defined the term “for purposes of deciding vicarious liability in sexual harassment cases under agency law.” In Lehman, the high court “alluded, however, to the ‘power delegated to [a supervisor] to control the day-to-day working environment.’” So while the high court previously indicated that “supervisor” meant more than just “upper management,” it never went as far as this decision.
In Aguas, for the first time, the state high court expressly rejected the narrower U.S. Supreme Court definition of “supervisor” as articulated in Vance v. Ball State University. Instead, the court adopted the broader definition of “supervisor” used by the EEOC. Essentially, under this standard, if the person has “the authority to take or recommend tangible employment actions affecting the complaining employee, or to direct the complainant’s day-to-day activities in the workplace,” then that person is a supervisor for purposes of attributing vicarious liability to the employer under the LAD. The court explained that New Jersey’s fact-specific analysis of sexual harassment cases is more in tune with the EEOC’s fact-specific approach that the U.S. Supreme Court rejected. The EEOC approach also was more consistent with the controlling case law in Lehman, the high court said, recognizing the “importance . . . of a supervisor’s authority to control the day-today working environment.” Therefore, adopting the broader EEOC definition of “supervisor” furthers one of the oft-repeated goals of the LAD: to eradicate sexual harassment in the workplace.
Accordingly, the court held broadly: “An allegedly harassing employee is the complainant’s supervisor if that employee had the authority to take or recommend tangible employment actions affecting the complaining employee, or to direct the complainant’s day-to-day activities in the workplace.”
Takeaways for the defense. While practitioners have been following the Faragher, Ellerth, and Lehman guidance for years, this case clarifies the availability of this pro-employer defense and serves as a reminder to employers to review their anti-harassment policies to ensure they are clearly written, uniformly enforced, and effective. The other factors cited by the court, such as anti-harassment training, are likewise key to the employer’s ability to raise this affirmative defense.
Based on the court’s admonitions, employers must ensure that not only do their employee handbooks include a provision on harassment, but they must regularly examine whether that policy has been effective and whether it needs to be updated. Many employers may have policies that have not been updated in some time. Also, employers should take this opportunity to add or revise policies that may overlap with an independent anti-harassment policy, such as social media and electronic communications policies.
In short, employers cannot be complacent with an existing employee handbook. The handbook needs to be reviewed and revised as needed on a regular basis. In addition, all “supervisors” as defined above need regular anti-harassment and anti-discrimination training.
Finally, because of the broader definition of “supervisor” now being used, employers need to be confident that managers and supervisory staff at all levels within the organization are acting properly at all times and have the necessary training and experience to do so. Employers need to be prepared to defend the actions and inactions of all of their “supervisors” under this newly prescribed law.
Source: Harris Neal Feldman. Feldman is a litigation partner in the Cherry Hill, NJ, and Philadelphia, PA, offices of Schnader Harrison Segal & Lewis LLP. His practice emphasizes the defense of employment litigation, as well as employment counseling for businesses of all sizes. Feldman is a member of the New Jersey and Pennsylvania bars and can be reached at hfeldman@schnader.com or (856) 482-5734.
Reposted with permission from Wolters Kluwer.
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