On February 11, the New Jersey Supreme Court issued its decision in Aguas v. New Jersey, No. A-35-13 (072467), holding that an employer’s antidiscrimination policy can be an affirmative defense to sexual harassment hostile work environment claims in certain situations. In so holding, the court adopted the test set forth by the U.S. Supreme Court in Burlington Industries v. Ellerth, 524 U.S. 742, 765 (1998), and Faragher v. Boca Raton, 524 U.S. 775, 807–08 (1998). Applying the Ellerth/Faragher test, the court held that, for claims alleging vicarious liability for supervisory sexual harassment, an employer may assert as an affirmative defense that it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior” and that “the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” However, this affirmative defense may only be asserted when the employer has not taken an adverse tangible employment action against the plaintiff employee.

The court also articulated a definition of “supervisor” for purposes of a hostile work environment sexual harassment claim, stating that a supervisor is an employee who “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.”

Overview of the Aguas Case

In 1999, the New Jersey Department of Corrections (DOC) instituted a written policy prohibiting discrimination in the workplace and mandated training on the policy for all employees. In addition to defining “sexual harassment,” the policy imposed special responsibilities on supervisors by requiring that they ensure the “work environment [] is free from any form of discrimination/harassment.” Supervisors who failed to meet the requirements could be subject to sanctions, including termination of employment. The policy incorporated reporting and investigation procedures pursuant to the State of New Jersey Model Procedures and prohibited retaliation against complaining employees.

The plaintiff, Ida Aguas, began her employment as a corrections officer in 2004. She alleged that two of her supervisors subjected her to sexual harassment in the workplace beginning in October 2009. She claimed that the area lieutenant engaged in repeated instances of inappropriate conduct, including sexually suggestive comments and motions as well as groping. Aguas also alleged that another sergeant subjected her to “hyper scrutiny,” selectively reprimanding her for uniform violations committed by several officers, for smoking outside on her break with a sweater around her shoulders and for not carrying a red pen.

Aguas claimed that she began reporting these incidents verbally in October 2009 to another lieutenant as well as the captain and acting chief. She did not make a written report because she feared retaliation, and she declined the DOC’s alternative suggestion that she participate in a group meeting with DOC officials and the alleged harassers. The DOC’s Equal Employment Division initiated an investigation into the verbal complaint of sexual harassment by interviewing and taking statements from the alleged harassers and 17 witnesses. The investigator concluded that the allegations were unsubstantiated.

Two days after the investigation ended, the plaintiff filed an action asserting claims under the New Jersey Law Against Discrimination (LAD), alleging sexual harassment and retaliation. Her complaint did not allege that the DOC took any tangible employment action against her. The state cited as affirmative defenses its “prompt and remedial action,” policy against sexual harassment and retaliation, and thorough investigation of the complaint. The trial court granted summary judgment for the state, holding that the state had established an affirmative defense and that the plaintiff failed to take the required steps in the policy. The New Jersey Superior Court Appellate Division affirmed the grant of summary judgment and rejected liability pursuant to agency principles. The decision was appealed to the New Jersey Supreme Court.

The Supreme Court’s Opinion

The court first addressed the impact of the DOC’s antiharassment policy on the plaintiff’s two claims for sexual harassment giving rise to a hostile work environment: her direct claim for negligence and recklessness against the state, based on Restatement (Second) of Agency § 219(2)(b), and her claim that the state is vicariously liable for sexual harassment committed by the area lieutenant and sergeant under Restatement § 219(2)(d).

With respect to the claim for negligence and recklessness under Restatement § 219(2)(d), the court held that the negligence standard requires the plaintiff to prove that the state failed to exercise due care with respect to sexual harassment in the workplace, that its breach of the duty of due care caused the plaintiff’s harm and that she sustained damages. The court further held that the five factors identified in Gaines v. Bellino, 173 N.J. 300 (N.J. 2002), are relevant to the negligence claim, and, as such, the antiharassment policy should be considered in accordance with these factors.¹

With respect to the vicarious liability claim pursuant to Restatement § 219(2)(d), the court held that an affirmative defense is available based on an employer’s creation and enforcement of an effective policy. The court relied on Lehmann v. Toys R Us, Inc., 132 N.J. 587 (N.J. 1993), which foresaw a fact-specific inquiry in which the implementation of a meaningful antiharassment policy was an important factor. The court also explicitly adopted the Ellerth/Faragher defense, which recognizes that an employer’s antidiscrimination policy can be an affirmative defense to sexual harassment hostile work environment claims brought pursuant to Title VII, even when the supervisor has created an actionable hostile work environment. This defense applies if (1) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior and (2) the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. Notably, the court reiterated that the Ellerth/Faragher defense is not available when the harassment culminates in a tangible employment action, when an employer implements an ineffective antiharassment policy or when an employer fails to enforce its policy.

The second issue that the court addressed was the definition of “supervisor” for purposes of claims based on sexual harassment giving rise to a hostile work environment pursuant to Restatement § 219(2)(b). The court declined to adopt the restrictive definition of “supervisor” — an employee who has been empowered to take tangible employment actions against the victim — as set forth by the U.S. Supreme Court in Vance v. Ball State University, 133 S. Ct. 2434, 2443 (2013). Instead, the court adopted the Equal Employment Opportunity Commission’s definition of “supervisor,” which includes not only employees granted the authority to make tangible employment decisions, but also those placed in charge of the complaining employee’s daily work activities. The court reasoned that this broader definition takes into account the wide range of employer structures and factual settings in which sexual harassment occurs and furthers the goals of the LAD. In short, the court held that the alleged harassing employee should be considered a supervisor for purposes of a hostile work environment claim if either (1) he/she was authorized to undertake tangible employment decisions affecting the plaintiff or (2) he/she was authorized by the employer to direct the plaintiff’s day-to-day work activities.

In addressing the key issues discussed above, the New Jersey Supreme Court explicitly decided that the federal standards for hostile work environment claims apply equally to New Jersey state law claims and foreclosed the debate as to the applicability of the Ellerth/Faragher affirmative defense. This decision reinforces the LAD’s goal to deter sexual harassment and encourages employers to take appropriate and meaningful steps to that end. Additionally, this decision is important because it rejects a limited definition of “supervisor” and potentially permits employees who may not fall within the formal hierarchy to constitute a supervisor for purposes of hostile work environment claims. All employers with New Jersey employees should review their existing sexual harassment policies and procedures to ensure that those policies incorporate the Ellerth/Faragher principles.

Endnote

1 The Gaines five factors are the existence of (1) formal policies prohibiting harassment in the workplace; (2) complaint structures for employees’ use, both formal and informal in nature; (3) antiharassment 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 a demonstration of that policy commitment by consistent practice.