Last week, the New Jersey Supreme Court analyzed the impact of an employer’s anti-harassment policy on an employee’s claims of negligence, recklessness and vicarious liability against employers under the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1 to -49. In addition, the Court was called upon to determine who is a “supervisor” for purposes of claims based on sexual harassment giving rise to a hostile work environment. See Aguas v. State of New Jersey, A-35-13 (February 11, 2015) (Slip Op.).

In analyzing the first issue, the Court recognized two primary categories of claims against employers for sexual harassment committed by their employees under Restatement § 219. The first is a direct cause of action against the employer for negligence or recklessness under Restatement § 219(2)(b). The second is a claim for vicarious liability under Restatement § 219(2)(d). The Court analyzed the impact of an employer’s anti-harassment policy under both claims.

With regard to the first type of claim (direct negligence or recklessness), the Court held that an employer’s anti-harassment policy “is relevant to the elements” of the claim and, therefore, “should be considered in accordance with the factors identified in Gaines v. Bellino, 173 N.J. 301 (2002). With regard to the second type of claim (vicarious liability), the Court adopted the two-pronged affirmative defense to vicarious liability claims set forth in the United States Supreme Court’s decisions in Burlington Indus. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998).

Specifically, the New Jersey Supreme Court held that an employer in a hostile work environment sexual harassment case may assert as an affirmative defense that it exercised reasonable care to prevent and correct promptly any sexually harassing behavior and the plaintiff employee unreasonably failed to take advantage of preventive or corrective opportunities provided by the employer or to avoid harm otherwise. The defendant employer has the burden to prove both prongs of the affirmative defense by a preponderance of the evidence. This defense, however, “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.”

Turning to the second issue, the Court found that the definition of a “supervisor” for purposes of claims based on sexual harassment giving rise to a hostile work environment claim should be read expansively to promote the paramount goal of the LAD. Specifically, the Court held that a “supervisor” is defined as: (1) an employee granted the authority to make tangible employment decisions; or (2) an employee placed in charge of the complainant’s daily work activities.

Writing for the dissent, Justice Albin, joined by Chief Justice Rabner, expressed the view that the LAD provides greater protection to employees than federal law and, as such, it was inappropriate for the majority to adopt a standard established in cases interpreting federal law. The dissent further asserted that if the New Jersey Legislature wanted to include an affirmative defense for supervisory liability it could have amended the LAD, but it did not.

While the Aguas decision is a welcome sight for New Jersey employers, the decision underscores the necessity of a strong anti-harassment policy. In order to avoid potential liability for an employee’s unilateral discriminatory acts, employers must formulate and implement meaningful and effective policies and procedures for employees to utilize in response to harassment. As such, employers should re-examine their current anti-harassment policies and procedures with legal counsel to ensure their policies and procedures effectively prevent and/or correct (to the extent possible) sexual and other unlawful harassment in the workplace.