The New Jersey Appellate Division recently held that a written warning, if part of a system of progressive discipline, may constitute an adverse employment action under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49 (“NJLAD”).

In Prager v. Joyce Honda, Inc., No. A-3691-14T3, ___ N.J. Super. ___ (App. Div. Aug. 22, 2016), the plaintiff, while employed by Joyce Honda, Inc., was approached by a valued customer who pulled at her shirt, revealing her bra. The plaintiff informed Joyce Honda management of the incident, who stated it would be disappointed to lose the customer, but offered to contact and reprimand him. Thereafter, the plaintiff informed management that she wanted to press charges against the customer. Management, on the plaintiff’s behalf, called the police, who interviewed her at the dealership. As a result of the police report, the customer pled guilty before the municipal court to a petty disorderly offense of offensive touching.

The plaintiff claimed that she thereafter became isolated by her coworkers and, about a week after she filed the report, received two written warnings for leaving early without permission. The first warning concerned an infraction which occurred four days before she made the police report. The first warning was silent as to repercussions. The second warning stated that further infractions could result in time off without pay or termination.

When management presented the plaintiff with the two written warnings, she became upset, stating that the warnings were false and issued in retaliation for pressing charges against the customer. The plaintiff claimed that she had left early many times before without incident and that her high level of anxiety was causing her to throw up before work. In response, management offered to rescind the warnings and suggested that, if her work was making her feel sick, it would be in her best interest to resign. The following day, the plaintiff resigned because she did not “trust” Joyce Honda anymore.

Thereafter, the plaintiff filed suit against Joyce Honda for, among other claims, retaliation under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49 (“NJLAD”). After the close of the plaintiff’s case, Joyce Honda filed a motion for involuntary dismissal. The trial court granted the motion, finding, in part, that the plaintiff’s municipal court complaint against the customer was not protected activity under the NJLAD as it did not constitute a “complaint in any proceeding under [the NJLAD].”

On appeal, the Appellate Division affirmed, but on different grounds. The Appellate Division first held that the trial court erred in finding that a municipal court complaint was not protected activity under the NJLAD. The plaintiff’s retaliation claim nevertheless failed because she could not demonstrate that the two written warnings constituted an adverse employment action. In making this determination, the Court applied an objective standard, i.e., whether a reasonable employee would have found the challenged action materially adverse. Part of the Appellate Division’s focus was the uncertainty of further discipline: it was impossible to determine the significance of the warnings because the plaintiff resigned the day after she received the written warnings, the warnings stated the “possibility, not the promise of time off without pay or termination” and management offered to rescind the warnings. The Appellate Division noted that the analysis was case-specific, explaining that a written warning could be deemed materially adverse, such as where a formal system of progressive discipline is enforced.

The Bottom Line. Prior to Prager, New Jersey cases generally found that written warnings, absent consequential discipline, did not constitute adverse employment actions. Prager, however, makes it clear that, if the warning sets forth even future mandatory progressive discipline, such action may amount to retaliation. To limit exposure to retaliation claims, and likely discrimination claims as well, it is recommended that employers avoid issuing written statements, such as warnings or handbooks, that set forth mandatory progressive discipline.