Employers Who Implement Effective Sexual Harassment Policies Can Avoid Vicarious Liability

In its recent landmark decision in, Ilda Aguas v. State of New Jersey, No. A-35-13 (Feb. 11, 2015), the New Jersey Supreme court broke new ground in the law of sexual harassment with an opinion that can be viewed as a victory for both employers and employees.  For employers, the Court formally adopted the United State Supreme Court’s affirmative defense analysis, which may now be invoked to shield employers from liability for a supervisor’s sexual harassment.  Consistent with the  affirmative defense, the Court made clear that the defense is only available to those employers who develop comprehensive and effective sexual harassment programs that include written polices, complaint procedures, employee training and prompt investigation of harassment complaints.

On the employee side, the Court expanded the definition of “supervisor,” thus broadening the scope of employee’s whose conduct can trigger employer liability for workplace sexual harassment.

The Facts: Aguas, a corrections officer at the Department of Corrections (DOC), alleged her male supervisors sexually harassed her over the course of several months, including inappropriate comments and touching.  Aguas conceded her supervisors did not take any tangible employment action against her.

Since 1999 the DOC had in place a comprehensive written sexual harassment policy that delineated procedures for reporting, investigating and remediating claims of harassment.  Aguas acknowledged she received a copy of the DOC’s policy, but denied receiving training with respect to the policy.   However, Aguas instituted two prior written complaints under the policy, one in 2005 alleging discrimination and a second complaint in 2007 alleging workplace violence.

Aguas verbally reported her allegations of sexual harassment to her supervisors. In response, the DOC directed Aguas to file a written report, as required by its policy, or alternatively, she could participate in a meeting with DOC officials and the accused supervisors. Aguas did not pursue either option, but The DOC nevertheless investigated her allegations and issued a report concluding that the allegations were unsubstantiated.

While the DOC’s investigation was pending, Aguas filed suit under New Jersey’s Law Against Discrimination (“LAD”) claiming that her supervisors’ conduct subjected her to a hostile work environment. The trial court granted the DOC’s motion for summary judgment and dismissed Aguas’ LAD claims, citing the DOC’s legitimate complaint procedures and Aguas’ failure to follow the policy’s procedures for reporting sexual harassment. Aguas appealed and the Appellate Division affirmed the trial court.  Aguas appealed that decision to the New Jersey Supreme Court.

The Holding: On review, the New Jersey Supreme Court adopted the affirmative defense analysis as the standard for determining employer liability under the LAD for supervisory actions that create a sexually hostile work environment.  Mirroring the analysis, the Supreme Court reasoned that an employer can avoid liability for the harassing conduct of its supervisor if the employer establishes by a preponderance of the evidence that:

  1. The employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and
  2. The employee unreasonably failed to take advantage of preventative or corrective opportunities provided by the employer or to otherwise avoid harm.

Reiterating the broad remedial purpose of the LAD to eradicate sexual harassment in the workplace, the Court emphasized that the availability of an affirmative defense serves as a strong incentive to employers to notify employees that sexual harassment will not be tolerated, to adopt written policies prohibiting harassment and detailing complaint procedures available to employees, to provide workforce training on the policy, and to undertake a prompt, reasonable investigation into employee complaints. In response to the dissent’s contention that the affirmative defense permits employers to “seek cover behind an ineffective anti-discrimination policy,” the Court reaffirmed that an employer that implements an ineffective policy or fails to enforce its policy, is barred from asserting this affirmative defense.  Finally, consistent with , the Court held that an employer cannot assert the affirmative defense when a supervisor’s harassment culminates in a tangible employment action, such as termination, demotion or an undesirable reassignment.

On the negative side for employers, the decision expanded the definition of “supervisor” for the purposes of hostile work environment claims under the LAD. The court rejected the United States Supreme Court’s narrower definition of a supervisor that applied only to those individuals with the authority to hire, fire and make other tangible employment decisions.  Rather, the Court’s definition includes not only those individuals authorized to make tangible employment decisions, but also extends to those individuals who are authorized to direct the employee’s day-to-day work activities.

The Employer’s Takeaway: In light of this decision, New Jersey employers should immediately review their sexual harassment policies and procedures to ensure that they are sufficiently effective in eradicating workplace harassment.    As cautioned by Court, employers who implement sexual harassment programs in name only cannot avail themselves of the affirmative defense. To pass muster as an effective program, sexual harassment policies should be issued annually and clearly list prohibited behaviors. The policies should also include a detailed complaint procedure that provides more than one individual a complainant can speak to and written reassurance that no retaliation will result from invoking the complaint procedure. These policies also should provide for prompt and impartial investigations and effective remediation of determined violations. In addition to written anti-harassment policies, employers should conduct periodic sexual harassment training to all staff to educate employees in the program and reiterate its commitment to a workplace free of sexual harassment.

In addition, as a result of the Court’s expansive definition of a supervisor, employers should focus their attention on implementing policies and conducting training for all employees with the authority to direct the day-to day activities of subordinates, not only the select few with the power to make tangible employment decisions.  Employers who fail to heed the Supreme Court’s warning will face increased liability for supervisors’ actions, liability that could have been avoided through investment in effective anti-harassment policies and training

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