January 1, 1900

by Todd J. Leon

In 1993, the New Jersey Supreme Court handed down its landmark decision in one of the most important employment law cases ever decided: Lehmann v.Toys R Us. In Lehmann, the court established the criteria for both what constitutes an actionable claim for sexual harassment, as well as what standards should apply when assessing vicarious liability for an employer. Those standards have been applied and discussed by courts countless times during the past decade. Of all of these new cases, perhaps the most important from the perspective of an employer seeking to avoid liability was issued during the Summer of 2002 by the New Jersey Supreme Court in Gaines v. Bellino. This new decision imposes a greater burden on the employer to demonstrate not only that its anti-harassment policy and procedure are in place, but that the policy is "meaningful and effective" in order to avoid vicarious liability.

In Gaines, the plaintiff filed a complaint against her direct supervisor and employer (the County of Hudson Correctional Facility), alleging violations of the New Jersey Law Against Discrimination ("LAD") arising from allegations of sexual harassment over a five-year period of time. Although there was evidence that the employer had an anti-harassment policy in effect, the plaintiff presented evidence that the County’s policies were loosely enforced. Defendants moved for summary judgment on the issue of vicarious liability; asserting that the County had taken sufficient preventative steps in respect to sexual harassment. The trial court granted defendants’ motions and dismissed plaintiff's complaint in its entirety, finding that the policy against harassment was known to the plaintiff; that the policy was known to the superior officers; that plaintiff did not choose to report the behavior; and that the employer acted when it was brought to the attention of higher authorities. Plaintiff appealed the dismissal of her claims and the Appellate Division affirmed, applying Lehmann. The court held that the employer was insulated from vicarious liability because the employer had a policy, publicized it through posters, promulgated it through successive editions of employee handbooks, conducted training, and acted when facts were brought to its attention.

The Supreme Court Speaks

In July of 2002, the Supreme Court - in a 7-0 vote - reversed and remanded the case for further proceedings. The court essentially expanded its holding in Lehmann with regard to employer’s insulation from vicarious liability, holding that it is the establishment of a meaningful and effective anti-sexual harassment workplace policy and complaint mechanism that protects the employer from vicarious liability. An employer can be liable vicariously for sexual harassment in the workplace if the anti-harassment policy is "no more than words." It is only when the policy is effective at preventing harassment and protecting the employees will an employer be protected from vicarious liability.

To support its conclusions, the court reiterated its ruling in Lehmann regarding what standards apply when assessing employer liability under the LAD for various forms of relief. The court identified several factors as being relevant to determining whether an employer had acted negligently in failing to establish an anti-harassment policy in its workplace, including whether the employer had: (1) created formal policies prohibiting harassment in the workplace; (2) fashioned complaint structures for employees’ use, both formal and informal in nature; (3) provided mandatory antiharassment training for supervisors and managers and available to all employees of the organization; (4) enforced effective sensing or monitoring mechanisms to check the trustworthiness of the policies and complaint structures; and (5) made an unequivocal commitment from the highest levels of the employer that harassment would not be tolerated and demonstration of that policy commitment by consistent practice.

A Rededication to Enforce the Lehmann Standards "Meaningfully"

In arguing her case before the Supreme Court, Ms. Gaines contended that the Appellate Division misapplied the Lehmann principles and failed to recognize that material issues of fact implicated at least two of the factors relevant to the question of employer liability: (1) that training must be mandatory for supervisors and managers and must be offered for all members of the organization; and (2) that the employer must have effective sensing or monitoring mechanisms to check the trustworthiness of the prevention and remedial structures available to employees in the workplace. The Supreme Court analyzed the motion record and found that the facts clearly did not support the summary disposition granted to defendants. The court found that the plaintiff's informal, verbal reporting of the incidents to several superior officers failed to result in any remedying for the plaintiff. Further, the court concluded that plaintiff provided a satisfactory explanation for being reluctant to file a formal harassment complaint, as she perceived the formal reporting of the incidents to be of no avail because she believed that nothing would change for her. Moreover, the record demonstrated that although plaintiff did not file a formal written complaint, she did protest orally to several co-workers and superior officers immediately after the incidents of harassment took place.

The employer's defense to the cause of action focused upon plaintiff's failure to file a formal complaint. The court found, however, that the plaintiff's inaction alone is insufficient to entitle defendants to an affirmative defense insulating the employer from liability for an alleged hostile work environment. The court held that plaintiff's failure to file a formal complaint must be considered in the context of whether the employer had been negligent in combating the creation of a sexually discriminatory hostile work environment by failing to establish meaningful and effective policies and procedures for employees to use in response to harassment.

In Gaines, the failure of the defendant employer to demonstrate that its policy was more than implemented permitted plaintiff's complaint to survive. The employer needed to demonstrate that its anti-harassment policy represented an unequivocal commitment from management of the employer's opposition to sexual harassment, and that its policies are meaningful and effective and more than just mere words encapsulated in the policy. Stated plainly, mere implementation and dissemination of anti-harassment procedures with a complaint procedure does not alone constitute evidence of due care. The court recognized that although the existence of effective preventative mechanisms provides some evidence of due care on the part of the employer, given the foreseeability that sexual harassment may occur, the absence of effective preventative mechanisms will present strong evidence of an employer's negligence.

The import of the Supreme Court's admonitions in Gaines were recently reiterated in the case of Velez v. Jersey City, where the Appellate Division reversed a trial judge's grant of summary judgment to the defendant City in the plaintiff's LAD claim. Relying heavily upon Gaines in overruling a trial court's grant of summary judgment in favor of the employer, the appellate court commented that the reasonableness of an employer's dissemination, implementation, monitoring and enforcement of its anti-harassment policy will be closely scrutinized.

The Gaines case raises serious questions concerning the effectiveness of policies and provides plaintiffs with the opportunity to prove that an employer may be liable vicariously for sexual harassment in the workplace because the anti-harassment policy is no more than words. As always, Hill Wallack stands ready to assist any employer facing issues regarding the implementation and/or enforcement of anti-harassment policies.

Todd J. Leon is an associate of Hill Wallack where he is a member of the Litigation Division and Trial & Insurance Practice Group.