On February 11, 2015, the Supreme Court of New Jersey expressly adopted the test created by the United States Supreme Court in Faragher v. City of Boca Raton, 524 U.S. 775, 807 (1998) and Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 765 (1998). The Faragher/Ellerth defense provides an employer with an affirmative defense to vicarious liability for a supervisor’s sexual harassment. In Aguas v. State, No. 072467, 2015 WL 659543, at *1 (N.J. Feb. 11, 2015), the New Jersey Supreme Court ruled, for the first time, that the Faragher/Ellerth affirmative defense was viable under New Jersey law. In reaching this decision, the New Jersey Supreme Court addressed two issues which it had not previously ruled upon: (i) the impact of an employer’s anti-harassment policy for purposes of negligence, recklessness, or vicarious liability claims, and (ii) which factors trial courts should apply in determining if an employee will be considered a supervisor for a hostile work environment sexual harassment claim.

In addressing the first issue, the Court reaffirmed that an “effective anti-harassment policy, or [a] failure to maintain such a policy, is a critical factor in determining negligence and recklessness claims…” In connection with reaffirming that an effective anti-harassment policy is a critical factor to consider, the Court went one step further and expressly adopted the Faragher/Ellerth analysis for determining whether an employer will be held vicariously liable for a supervisor’s sexual harassment. Under this analysis, an employer is provided with an affirmative defense to vicarious liability for hostile work environment sexual harassment claims if the employer can show: “[i] that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior [i.e., maintaining an effective anti-harassment policy and promptly investigating any such claims]; and [ii] that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” The employer, however, may not raise the defense if the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or an undesirable reassignment.

In adopting the Faragher/Ellerth defense, the New Jersey Supreme Court found that the defense “furthers the [New Jersey Law Against Discrimination’s] purpose of eliminating sexual harassment in the workplace by motivating employers to maintain effective anti-harassment policies, and by encouraging employees to take prompt action against harassing supervisors in accordance with those policies.” The Court further found the affirmative defense to be “a powerful incentive for an employer to unequivocally warn its workforce that sexual harassment will not be tolerated, to provide consistent training, and to strictly enforce its policy.”

With respect to the second issue, determining who constitutes a supervisor for sexual harassment claims, the Court held that “an allegedly harassing employee is the complainant’s supervisor if that employee had the authority to take or recommend tangible employment actions affecting the complaining employee, or to direct the complainant’s day-to-day activities in the workplace.”

In light of the Aguas decision, New Jersey employers should review their anti-harassment policies and procedures to ensure that they are adequate. Effective policies and procedures will enable employers to utilize the Faragher/Ellerth defense in cases involving alleged violations of the New Jersey Law Against Discrimination.