Labor & Employment Insights

The floodgate of sexual harassment allegations spawned by the #MeToo movement is evidence that employers have dropped the ball on fostering work environments free from inappropriate sexual behaviors. The good news is, there are three simple steps employers can take to begin preventing workplace harassment from occurring — and potentially avoid liability if legal action ensues.

The courts have created a safe harbor defense available in most instances to employers who can show they acted reasonably to prevent the occurrence of workplace harassment. Although most employers have implemented written policies prohibiting sexual harassment, merely disseminating such policies falls short of the actions courts require to invoke the safe harbor defense. Rather, employers must show that their anti-harassment policies are far more than paper documents, but are part of a program enforced through consistent practice and employee training. Employers may qualify for the defense if they undertake three actions.

Action 1: Distribute an Anti-Harassment/Complaint Policy

In the wake of the #MeToo and #TimesUp movements, the New York Legislature and the New York City Counsel have adopted groundbreaking legislation imposing significant employer obligations and expanding employee protections for unlawful sexual harassment in the workplace.

New York State Legislation: As part of its 2018-2019 state budget bill, on the New York Assembly included numerous provisions aimed at eradicating workplace sexual harassment. In his press release, Gov. Cuomo (who is expected to sign the bill) described the action as “the strongest and most comprehensive anti-sexual harassment protections in the nation,” which includes the following key provisions:

• Mandatory Training and Anti-Harassment Policy: regardless of size, all New York employers must provide annual “interactive” sexual harassment training to all employees that covers the following:

In recent years many New Jersey municipalities passed varying ordinances requiring employees within their jurisdictions to be afforded paid sick leave benefits. To the relief of those employers who were dealing with the patchwork of local sick leave ordinances, on May 2, 2018, Governor Murphy signed New Jersey’s first state-wide paid sick leave act into law, pre-empting all local ordinances in favor of uniform paid sick leave requirements. The act becomes effective on October 29, 2018.

Although most employers provide some measure of paid time-off benefits, they must nevertheless ensure that existing policies meet the minimum requirements of the new paid sick leave act. For those employers who do not provide any paid time off benefits for sickness, they will now be required to do so for those absences that fall within the law.

Coverage: Under the new law, all New Jersey employers, regardless of size, must provide one hour of paid sick leave for every 30 hours worked to each covered employee, including temporary employees, working in the State. Construction employees covered by a collective bargaining agreement, health care employees and public employees with paid sick leave benefits are excluded from coverage.

In its recent decision in Trevejo v. Legal Cost Control, Inc., the Appellate Division signaled that the anti-discrimination protections of the New Jersey Law Against Discrimination (NJLAD) may be applied extraterritorially to employees who are not inhabitants of New Jersey, who do not come into the State to perform any services, but who provide services to a New Jersey employer exclusively via a remote computer.

Susan Trevejo worked for Legal Cost Control, a New Jersey corporation located in Haddonfield, NJ. Trevejo was not a resident of New Jersey, and during her tenure with Legal Cost performed all of her job duties from her home computer in Massachusetts. Following her termination, Travejo filed an age discrimination claim against Legal Cost under NJLAD, and the company responded with a motion for summary judgment on the ground that Travejo was not an “inhabitant” of the State entitled to pursue an NJLAD claim.

Reversing the lower court’s grant of summary judgment, the appellate court found the dismissal of the claim premature. The court noted that the statutory language of the NJLAD consistently extends to “any person.” Conversely, the term “inhabitants” only appeared in the legislative preamble, not the substantive provisions of the statue; thus, limiting the NJLAD’s protections to “inhabitants” of the State would be an overly restrictive reading of a statute that must be broadly construed to achieve its goal of “the eradication of the cancer of discrimination in the workplace.”

This past February the Appellate Division of the New Jersey Superior Court issued its unreported opinion in Maselli v. Valley National Bancorp (the “Bank”), a case that serves as a stark warning to employers of the exacting standards that must be met before a contractual disclaimer in an employee handbook (or other document) will be deemed adequate by the courts.

By now, most employers are aware that employee handbooks or other policies describing the terms and conditions of employment may give rise to contractual obligations unless the employer includes a clear and prominent disclaimer of any contractual obligation. In its seminal decision in Woolley v. Hoffman La Roche, the New Jersey Supreme Court suggested that the disclaimer indicate that “there is no promise of any kind by the employer contained in the manual; [and] that regardless of what the manual says and provides, the employer promises nothing…”

In Maselli, the plaintiff claimed she was transferred and ultimately terminated because the Bank failed to comply with that anti-harassment and bullying provisions of its Code of Conduct. The Bank moved to dismiss, pointing to the following disclaimer that was prominently displayed on the first page of its employee manual:

Since the #MeToo movement captured the public’s attention, state legislatures across the country have proposed legislation banning the confidentiality of settlement agreements and mandatory arbitration of sexual harassment claims.

A comprehensive bill pending before the New Jersey State Legislature, Senate Bill S3581, goes farther, banning employers from including a jury waiver, mandatory arbitration clause, or non-disclosure provision in any settlement agreement or employment contract. Unlike many of the bills proposed in other jurisdictions, this prohibition extends to all potential discrimination claims under the NJLAD, not just to sexual harassment claims.

The Legislature’s effort to address the ongoing issue of workplace harassment by banning confidentiality in settlements ignores the fact that in some instances the complaining employee may want the settlement to remain confidential, not to mention the disincentive to employers to quickly and fairly resolve cases without engaging in protracted litigation. Given both the legislative and cultural climate changes brought on by the #MeToo movement, it is critical for employers to review their anti-harassment policies and employment, arbitration and settlement agreements to ensure they stay compliant with any legal developments in this changing area. More important, employers should develop a robust employee training program to educate employees about the wide array of unlawful behaviors that are prohibited in the workplace, and to demonstrate the Company’s commitment to eradicating these behaviors and fostering an environment that accords respect to all employees.

On April 24, 2018 Governor Murphy signed into law a bill amending the New Jersey Law Against Discrimination (NJLAD) to strengthen its existing pay equity protections and other remedies available under the statue. These changes will go into effect on July 1, 2018. Although principally aimed at remediating the pay gap between male and female employees, the pay equity amendments apply to all other protected classes, paving the way for disparate wage claims on the basis of race, age, disability and any other status protected by the NJLAD.

Moreover, the amendments prohibit employers from securing agreements from employees to shorten the statute of limitations for filing NJLAD claims or waving any of the other protections available to employees under the NJLAD (e.g., jury trial, attorney fees).

Changes to the Burdens of Proof in Wage Disparity Claims: Under current pay equity protections, an employee can bring a wage claim alleging that she is being paid at a rate that is lower than a male counterpart engaged in “similar” or “substantially equal” work. If the employee argues and establishes that the work is “similar,” the employer then bears the relatively light burden to merely articulate (not prove) a legitimate, nondiscriminatory reason for the pay differential. If the employer meets this light burden, the employee then bears the burden to show that the articulated reason is a pretext, and that the pay differential is attributable to her gender. However, if the employee argues she is paid at a lower rate than male employees performing “substantially equal” work, the employer faces a heightened burden. In this situation, the employee bears the initial burden of showing that the jobs are “identical” because they require “substantially similar skill, effort, and responsibility.” If the employee meets this burden, the burden then shifts to the employer who must prove that the pay differential is attributable to one of four factors: i) a seniority system; ii) a merit system; iii)a system that measures earnings by quantity or quality; or iv) a factor other than gender. Thus, employees pursuing “similar” work claims faced a heavier burden than those claiming “substantially equal” work claims.