Last week, in Aguas v. New Jersey, No. A-35-13 (Feb. 11, 2015), New Jersey’s high court embraced the federal Faragher-Ellerth defense for claims alleging vicarious liability for supervisory sexual harassment under New Jersey’s Law Against Discrimination (“LAD”). Under the Faragher-Ellerth analysis—which the U.S. Supreme Court crafted almost two decades ago—an employer may assert as an affirmative defense to vicarious liability that it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior,” and “the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise,” provided that the employer has not taken an adverse tangible employment action against the employee.

Here, the Plaintiff, a corrections officer employed by the Department of Corrections, claimed that her supervisor sexually harassed her and that, as a consequence, the Department was both directly and vicariously liable for the alleged misconduct. The Department moved for summary judgment on the grounds that the Plaintiff did not avail herself of the grievance procedure provided in the Department’s written policy prohibiting discrimination and harassment in the workplace.  The trial court granted the motion on these grounds, and the appellate division affirmed.

On appeal, the Supreme Court not only “expressly adopted” the Faragher-Ellerth standard as a defense to vicarious liability in supervisory sexual harassment cases, but also reaffirmed that the implementation and enforcement of an effective anti-harassment policy, or the failure to maintain such a policy, is a “critical factor” in assessing sexual harassment claims for direct liability (i.e., negligence or recklessness) under LAD.  The Court has remanded the case for the trial court to decide in accordance with these standards.

Despite this employer-friendly holding, it is worth noting that the Court did adopt the Equal Employment Opportunity Commission’s broad definition of a “supervisor” for purposes of sexual harassment claims, deciding that the term encompasses “not only the employees granted the authority to make tangible employment decisions, but also those placed in charge of the complainant’s daily work activities.”  In so doing, the Court declined to embrace the more restrictive definition recently set forth by the U.S. Supreme Court in Vance v. Ball State University, 133 S. Ct. 2434 (2013).

Given the court’s decision, employers should make every effort to maintain a clear and effective anti-harassment policy to minimize the risks of direct or vicarious liability for sexual harassment under LAD.