Developments In The Evolving Area Of A New Jersey Employer’s Liability For The Harassing Conduct Of Its Supervisors

New Jersey employers are required to entrust management and supervisory employees with carrying out its policies, and preventing the creation of a hostile work environment. Where there is a breakdown, however, and an employee is able to establish that a supervisor created a hostile work environment – be it on account of the employee’s gender, race, religion, sexual orientation, or other classification protected by the New Jersey Law Against Discrimination (LAD) –  the unlawful conduct of that supervisor can (and often will) expose the employer to liability for the victim’s damages.  This article discusses steps employers should take to serve the dual purpose of (i) improving the collegiality of its workforce while preventing distasteful, unlawful and unprofessional interactions among co-workers; and (ii) avoiding liability for the wayward conduct of its supervisory personnel.

Since 1998, in Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), the United States Supreme Court has set forth two ways in which an employer will be subject to liability for the torts of its employees acting outside the scope of their employment.  First, if the employer itself is negligent or reckless, i.e., if it knew or should have known about the harassment and failed to stop it. See Restatement (Second) of Agency, §219(2)(b).  Second, the employer will be liable if the supervisory employee purported to act or to speak on behalf of the employer and there was reliance upon apparent authority, or he/she was aided in accomplishing the tort by the existence of the agency relation. Id., §219(2)(d).

The New Jersey Supreme Court has adopted the United State Supreme Court’s approach, concluding that employer liability for compensatory damages in supervisory hostile work environment claims is governed by agency principles. Lehman v. Toys 'R' Us, Inc., 132 N.J. 587, 619 (1993).

This is an evolving area of the law.  On September 23, 2014, the New Jersey Supreme Court heard oral argument in its review of the Appellate Division’s affirmance of Summary Judgment dismissing a Corrections Officer’s LAD sexual harassment claim. A-35-13 Aguas v. State of New Jersey (072467). The plaintiff, Ilda Aguas, alleged that her supervisor, an area lieutenant also employed by the Department of Corrections: (1) followed her to the parking lot, got close to her face, and asked "Are we going to a telly [(i.e., a motel)]?"; (2) called plaintiff on her cell phone following the prior incident to demand that she return handcuffs that she had taken with her; (3) sniffed the handcuffs upon plaintiff's return of such and stated, "Where you been? If you want to borrow them, just let me know"; (4) sat on plaintiff's lap facing her, blew his whistle, and grinded his pelvis into her; (5) massaged plaintiff's shoulders; (6) stuck out his buttocks toward plaintiff, flexed his arms, and said, "Do me a favor and take my radio off [my hip]"; (7) grabbed plaintiff from behind, held her hands behind her back, bent her over a table, and placed his pelvis on her buttocks; (8) simulated boxing techniques with plaintiff, causing physical contact; (9) danced around plaintiff while blowing his whistle as if plaintiff was a stripper;  among other allegations.

The Appellate Division in Aguas affirmed dismissal of plaintiff’s harassment claims against her employer, because the employer instituted a proper anti-discrimination policy and engaged in a thorough investigation of the claims, and because there was “no factual showing that the harassment of which plaintiff complains derived from a supervisory relationship.”  The Supreme Court’s questioning of plaintiff’s and defense counsel at oral argument focused on whether the area lieutenant’s status as plaintiff’s supervisor alone – without regard for whether his alleged harassment derived from that supervisory relationship – was sufficient to allow a plaintiff to survive Summary Judgment on a hostile work environment claim under §219(2)(d).

In a recent development favorable to employers which have in place effective anti-discrimination policies and complaint procedures, the New Jersey Appellate Division approved for publication its opinion in Dunkley v. S. Coraluzzo Petroleum Transporters, 437 N.J.Super. 366 (Sept. 16, 2014). This decision affirmed Summary Judgment in an employer’s favor on plaintiff’s LAD racial harassment claim because the employer could not be held vicariously liable for the conduct of the plaintiff’s supervisor.

Critical to the Dunkley decision is that upon commencement of his employment as an oil delivery driver, plaintiff was provided an employee handbook, which contained policies against discrimination and complaint mechanisms. Plaintiff also underwent two days of in-class training, which discussed the policies among other work items.  Plaintiff alleged that during his on-the-job training, he was subject to racially derogatory comments by his supervisor.  When plaintiff failed to return to work after the training, defendant’s management contacted him to inquire about his absence, met with him, and discussed the incidents plaintiff alleged occurred with the supervisor.

Following the meeting with management, plaintiff was transferred to a new supervisor, did not have to interact with the prior supervisor any more, and did not suffer any additional racially-based treatment. Plaintiff quit his employment and sued, alleging he suffered constructive discharge because his complaint was not kept confidential and he felt ostracized by co-workers, who "would shy away" from him.

The Dunkley court’s conclusion that Summary Judgment was warranted follows a line of cases that “adhere to the principle that if an employer has exercised due care in acting to prevent a [] discriminatory hostile work environment, vicarious liability should not attach. The establishment of an effective anti-[] harassment workplace policy and complaint mechanism evidences an employer's due care and may provide affirmative protection from vicarious liability.” Gaines v. Bellino, 173 N.J. 301, 303 (N.J.2002);  Barroso v. Lidestri Foods, Inc., 937 F. Supp. 2d 620, 635-36 (D.N.J. 2013) (In LAD action, employee failed to demonstrate genuine issue of material fact existed supporting the imposition of vicarious liability on the employer for the manager's harassing conduct where employer maintained both a policy expressly prohibiting discrimination and harassment, which was provided to new employees at the time they were hired).

Because the Dunkley employer maintained a handbook with well-defined anti-discrimination policies and complaint mechanisms, provided it to employees upon hire, directed new hires to read the handbook completely and become familiar with all policies and information provided, could demonstrate the effectiveness of the handbook, and took actions to protect the plaintiff from further harassment, the employer was able to avoid vicariously liable for the harassing supervisor’s conduct.

Competent employment counsel can provide invaluable assistance in perfecting policies, administering training and counseling employers when potentially harassing situations develop.  It is imperative that New Jersey employers maintain effective anti-harassment policies and procedures, publish these policies broadly, adequately train their employees at hire and routinely thereafter, take appropriate actions to stop harassment, provide a competent and easily-accessible complaint mechanism that can promptly and effectively investigate concerns about harassment, train supervisors of their responsibilities and impress upon them that they are invested in the maintenance of a harassment-free workplace, etc.  In so doing, New Jersey employers can potentially shield themselves from vicarious liability.  Even more importantly, those employers can provide their valuable employees with a harmonious workplace free from insidious harassment and discrimination.