LEHMANN v. TOYS `R' US, INC.
132 N.J. 587 (1993)
626 A.2d 445
THERESA LEHMANN, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT, v. TOYS 'R' US, INC., A CORPORATION, DON BAYLOUS, AND JEFFREY WELLS, DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS.
The Supreme Court of New Jersey.
Decided July 14, 1993.
Paul I. Weiner submitted a brief on behalf of amicus curiae Employment Law Council ( Timins & Weiner, attorneys).
The opinion of the Court was delivered by GARIBALDI, J.
This appeal presents this Court with two questions concerning hostile work environment sexual harassment claims under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -42 (LAD). First, what are the standards for stating a cause of action for hostile work environment sex discrimination claims? Second, what is the scope of an employer's liability for a supervisor's sexual harassment that results in creating a hostile work environment? We hold that a plaintiff states a cause of action for hostile work environment sexual harassment when he or she alleges discriminatory conduct that a reasonable person of the same sex in the plaintiff's position would consider sufficiently severe or pervasive to alter the conditions of employment and to create an intimidating, hostile, or offensive working environment.
We further hold that in the determination of an employer's liability for damages when an employee raises a hostile work environment discrimination claim against a supervisor: (1) an employer will be strictly liable for equitable damages and relief; (2) an employer may be vicariously liable under agency principles for compensatory damages that exceed equitable relief; and (3) an employer will not be liable for punitive damages unless the harassment was authorized, participated in, or ratified by the employer.
A. Procedural History
Plaintiff, Theresa Lehmann, brought a civil action in the Law Division against her former employer, Toys 'R' Us, Inc. (Toys 'R' Us); her former supervisor, Don Baylous; and Jeffrey Wells, a human resources manager at Toys 'R' Us. Plaintiff's principal allegations were that defendants subjected her to a hostile work environment on the basis of her sex in violation of the LAD. She asserted that sexual harassment perpetrated and condoned by the defendants had caused her to suffer damages including loss of wages and pension benefits, anxiety, detriment to her health, medical expenses, humiliation, and pain and suffering, and also that she had been required to expend attorneys' fees and to incur other litigation costs. She also alleged various other claims, separate from her LAD claims, including battery, negligence, intentional interference with contractual relations, and intentional infliction of emotional distress.
After a six-day bench trial, the trial court dismissed all of plaintiff's causes of action against defendants except her battery claim against Baylous, for which it awarded her $5,000 as damages.
Plaintiff's appeal to the Appellate Division resulted in the filing of three separate opinions. The Appellate Division unanimously affirmed the trial court's dismissal of plaintiff's non-LAD claims for invasion of privacy, intentional infliction of emotional distress, reprisal, and tortious interference with contractual relations. Lehmann v. Toys 'R' Us,
Judge D'Annunzio, in a brief separate concurrence, stated his "general agreement" with the majority's approach, but disagreed on the matter of an employer's vicarious liability for sexual harassment by a supervisory employee.
Judge Skillman, concurring in part and dissenting in part, rejected the Andrews test, and advocated instead that hostile work environment sexual harassment claims be evaluated under a more flexible standard based on the Equal Employment Opportunity Commission's Guidelines on Discrimination Because of Sex, 29 C.F.R. §§ 1604.1 to 1604.11 (EEOC Guidelines). Judge Skillman also stated that agency principles, rather than strict liability, ought to govern an employer's vicarious liability for sexual harassment by a supervisory employee.
In response to the conflicting opinions rendered by the Appellate Division, both parties filed appeals as of right pursuant to Rule 2:2-1(a), requesting this Court to identify the legal standards for stating an actionable claim of hostile work environment sexual harassment under the LAD and to define the standard for imposing liability on an employer for sexual harassment by its supervisor. Those are the only issues before this Court. We denied plaintiff's petition for certification, which addressed her non-LAD claims.
The following facts were adduced at trial. Lehmann testified that she began working for Toys 'R' Us in August 1981 as a file clerk in the Purchasing Department. She received various promotions to supervisory positions.
In November 1985, defendant Don Baylous joined Toys 'R' Us as Director of Purchasing Administration. Baylous supervised approximately thirty people, including Lehmann, who held the position of Purchase Order Management Supervisor. Baylous and Lehmann worked closely together on a daily basis, and at least once a week Lehmann met with Baylous in his office. Lehmann received favorable evaluations and promotions under Baylous's supervision, and was promoted to Systems Analyst for the Purchasing Department in September of 1986.
In or around December 1986, plaintiff began to notice what she considered offensive sexual comments and touchings from Baylous directed at other female employees. Plaintiff witnessed Baylous walk up behind a female employee at the company Christmas party and put his hands on her. The female employee evidently found his touching offensive because she told him loudly and in angry terms to get his hands off her. The record is replete with other instances of Lehmann witnessing Baylous touch and grab other female employees, although the chronology of those events is somewhat unclear.
The first incident directly involving Lehmann occurred in January 1987. Lehmann testified that Baylous directed her to reject a 300-page purchase order and to tell the employee to rewrite it, and that she replied that the employee would be very angry. Lehmann testified that Baylous told her to "just lean over his desk and show him your tits, implying that that way Frank couldn't get upset at me." Lehmann testified that Baylous had, at various times, directed her to "stick your tits out at" a new boss, and to "write a memo to cover your ass * * * because you have such a cute little ass."
Ms. Pantess's testimony corroborated that Lehmann ran out of Baylous's office crying and that she stated that Baylous had lifted up her shirt.
Lehmann testified that on January 22, 1987, she went to Baylous's immediate boss, Bill Frankfort, to complain about Baylous's conduct. Lehmann requested that she not be identified to Baylous as the complainant. She stated that Frankfort told her to handle it herself, and that she replied that she did not feel she could do so because she had been too afraid to confront Baylous up to that point. Lehmann also testified that Frankfort told her not to report the harassment to Howard Moore, the Executive Vice President in charge of purchasing, because he "was very straight-laced, and he was a family man." Several days later, Lehmann wrote and delivered a letter to Frankfort concerning her complaints of sexual harassment, but Frankfort did not open the letter until after Lehmann's resignation.
On January 26, 1987, Eric Jonas, Toys 'R' Us's Manager of Employee Relations, called Lehmann and a female co-worker who also had had problems with Baylous to his office to discuss Baylous's conduct. Lehmann testified that she told Jonas of the specific incidents and gave him a list of names of other women who had experienced inappropriate touchings or comments from Baylous. Lehmann told Jonas that she did not want Baylous fired but wanted his inappropriate behavior stopped. Jonas assured her that he would speak to Baylous. Several days later, Frankfort told Lehmann that Baylous had been spoken to about his conduct.
In early March 1987, Lehmann informed both Jonas and Frankfort that Baylous had not stopped touching employees and making inappropriate comments. She testified that Jonas told her that she was "paranoid." Jonas also offered Lehmann a transfer within the company, but Lehmann rejected that suggestion because, she said, she loved her job and had not done anything wrong and did not think she was the one who should be transferred.
The following week, Lehmann testified, Baylous grabbed her on the arm and she observed him touching and grabbing other female employees as well. She also was present at a meeting at which Baylous gratuitously announced that the reason that both he and another female employee had colds was not due to sexual intimacy.
Dissatisfied with the results of Jonas's and Frankfort's efforts to control Baylous's conduct, Lehmann took her complaints to Howard Moore, the Executive Vice President in charge of purchasing, on April 6. Lehmann told him that she felt she was being forced out of the company. Moore was dismayed that such conduct was going on without his knowledge.
Later that same day, Lehmann was called to personnel to meet with Laurie Lambert. Lehmann related to Lambert all that had occurred. Lambert offered Lehmann a transfer, but
The next day, Lehmann gave Baylous two weeks notice of her resignation, stating that it was for personal reasons. She was again summoned to meet with Lambert. Lambert again offered Lehmann a transfer, and recommended that Lehmann confront Baylous directly with her allegations to clear the air. Lehmann rejected both suggestions.
Lehmann testified that a few minutes later, Baylous entered the room. She related to him her complaints. She testified that he was apologetic at first, but that he grew angry and she became increasingly upset. Following the confrontation, Lehmann left Toys 'R' Us and did not return to complete her final two-week period.
Baylous denies that he ever engaged in sexually harassing conduct. He admits that he was formerly a "touchy" person, using pats on the back to convey approval and tapping people to get their attention. However, he denies that he ever touched any employee in a sexual manner, and vigorously denies the "sweater-lifting incident." He also admits to having made some suggestive comments, such as asking one employee if she had gone home for a "quickie" and telling another employee that she had a "cute rump," but he maintained that those comments were intended and interpreted as jokes. He denied ever telling Lehmann to "stick out" or "show" her "tits" or telling her that she had "a cute ass."
Jeffrey Wells, Toys 'R' Us's head of personnel, testified that he had made inquiries and discovered that there had been no window washing undertaken on the building in January 1987. That evidence was offered to refute Lehmann's statement that she saw scaffolding outside Baylous's window at the time of the shirt-lifting incident. Wells also testified that the company had continued investigating the allegations after Lehmann's departure, and that it had concluded that Baylous had not
Eric Jonas testified that he had monitored Baylous's conduct by making unannounced visits to Baylous's department. He also stated that he had interviewed four of the women whom Lehmann had identified as able to corroborate her complaints, and that none could do so.
Lehmann contended that Toys 'R' Us's investigation was inadequate. She asserted that despite the fact that Toys 'R' Us has a written corporate policy against sexual harassment requiring all claims to be fully investigated, the investigation documented, and those responsible subject to discipline or discharge, Jonas did not keep any substantive written records and failed to question key witnesses about important events. The trial court agreed.
Although Lehmann and defendants disagree about whether Baylous engaged in sexually harassing conduct, all agree and stipulated that Baylous did not attempt to obtain any sexual advantage from any employee of Toys 'R' Us.
The trial court, for the most part, declined to resolve the factual dispute between the parties. Instead, it assumed that all of Lehmann's allegations were true and held that nonetheless she had failed to state a claim for hostile work environment sexual harassment. The Appellate Division unanimously agreed that a hostile work environment in violation of LAD would be established if plaintiff's factual allegations were credited by a finder of fact. We affirm the Appellate Division's judgment that the trial court's dismissal of plaintiff's LAD claims must be reversed and the matter remanded for further fact-finding.
II. Sexual Harassment and The Law Against Discrimination
The New Jersey Law Against Discrimination was first enacted in 1945. Its purpose is "nothing less than the eradication `of the cancer of discrimination.'" Fuchilla v. Layman,
The LAD was enacted to protect not only the civil rights of individual aggrieved employees but also to protect the public's strong interest in a discrimination-free workplace. Fuchilla, supra, 109 N.J. at 335,
The LAD specifically prohibits employment discrimination based on sex. N.J.S.A. 10:5-12 provides:
The legislative history of the LAD is silent on the subject of sexual harassment.
In construing the terms of the LAD, this Court has frequently looked to federal precedent governing Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000e to § 2000e-17 ("Title VII"), as "a key source of interpretive authority." Grigoletti, supra, 118 N.J. at 97,
Sexual harassment is a form of sex discrimination that violates both Title VII and the LAD. See Meritor Sav. Bank v. Vinson,
Sexual harassment jurisprudence generally divides sexual harassment cases into two categories. Quid pro quo sexual harassment occurs when an employer attempts to make an employee's submission to sexual demands a condition of his or her employment. It involves an implicit or explicit threat that if the employee does not accede to the sexual demands, he or she will lose his or her job, receive unfavorable performance reviews, be passed over for promotions, or suffer other adverse employment consequences. Hostile work environment sexual harassment, by contrast, occurs when an employer or fellow employees harass an employee because of his or her sex to the point at which the working environment becomes hostile.
Plaintiff Lehmann does not charge that defendant Baylous engaged in quid pro quo sexual harassment. Rather, she alleges that his sexually-charged offensive conduct towards her and other women in the workplace created a hostile work environment.
Quid pro quo sexual harassment is more easily recognized and more clearly defined and well-established as a cause of action. Hostile work environment sexual harassment, on the
In the majority of hostile work environment cases, the harassing conduct takes the form of unwelcome sexual touchings and comments. However, the harassing conduct need not be sexual in nature; rather, its defining characteristic is that the harassment occurs because of the victim's sex. See Muench v. Township of Haddon,
Although we recognized in Erickson, supra, 117 N.J. at 155-57,
Like all courts, we are reluctant to penalize behavior that was not previously understood or intended to be wrongful. However, we cannot deny legal redress to the victims of discrimination and harassment merely because the perpetrators may be unaware of the illegality of their conduct. In order to ensure fairness for all, both employees and employers must be able to understand what constitutes a claim for gender-hostile work environment. A clear and intelligible legal standard will protect employees from the damage wrought by a hostile working environment and will enable employers to conform their conduct to the law.
We find that the standards expressed in the EEOC Guidelines, while helpful, are insufficiently structured to define the cause of action at this stage in the development of the law. However, we agree with the dissent below that the Third Circuit's Andrews test employed by the majority below contains too many analytical difficulties and deficiencies to be usefully employed here.
Rather than risking confusion by engrafting major revisions to the Andrews test, we announce a new test in the hope of creating a standard that both employees and employers will be able to understand and one that employers can realistically enforce. We cannot overstate the importance we place on a test that allows employees to know their rights in a given set of circumstances and that allows employers to set policies and procedures that comply with that test.
To state a claim for hostile work environment sexual harassment, a female plaintiff must allege conduct that occurred because of her sex and that a reasonable woman would consider sufficiently severe or pervasive to alter the conditions of employment and create an intimidating, hostile, or offensive working environment. For the purposes of establishing and examining a cause of action, the test can be broken down into four prongs: the complained-of conduct (1) would not have occurred but for the employee's gender; and it was (2) severe or pervasive enough to make a (3) reasonable woman believe that (4) the conditions of employment are altered and the
In this case, we discuss the standard assuming a female plaintiff, because in both the present case and the majority of cases, the plaintiff is a woman. However, the standard we announce today applies to sexual harassment of women by men, men by women, men by men, and women by women. The LAD protects both men and women and bars both heterosexual and homosexual harassment. The only difference in the standard would be that a male plaintiff would have to allege conduct that a reasonable man would believe altered the conditions of his employment and created a working environment that was hostile to men.
III. Harassment Because of Plaintiff's Sex
The first element of the test is discrete from the others. It simply requires that in order to state a claim under the LAD, a plaintiff show by a preponderance of the evidence that she suffered discrimination because of her sex. Common sense dictates that there is no LAD violation if the same conduct would have occurred regardless of the plaintiff's sex. For example, if a supervisor is equally crude and vulgar to all employees, regardless of their sex, no basis exists for a sex harassment claim. Although the supervisor may not be a nice person, he is not abusing a plaintiff because of her sex.
The LAD is not a fault- or intent-based statute. A plaintiff need not show that the employer intentionally discriminated or harassed her, or intended to create a hostile work environment. The purpose of the LAD is to eradicate discrimination,
When the harassing conduct is sexual or sexist in nature, the but-for element will automatically be satisfied. Thus when a plaintiff alleges that she has been subjected to sexual touchings or comments, or where she has been subjected to harassing comments about the lesser abilities, capacities, or the "proper role" of members of her sex, she has established that the harassment occurred because of her sex.
However, not all sexual harassment is sex-based on its face. In Andrews, supra,
In such non-facially sex-based harassment cases a plaintiff might show that such harassment was accompanied by harassment that was obviously sex-based. Alternatively, she might show that only women suffered the non-facially sex-based harassment. All that is required is a showing that it is more likely than not that the harassment occurred because of the plaintiff's sex. For a female plaintiff, that will be sufficient to invoke the rebuttable presumption that the harassment did in fact occur because of the plaintiff's sex. A male plaintiff, in order to invoke the presumption, must make the additional
In the case at bar, of course, the harassing conduct alleged by Lehmann consisted of sexual comments and touchings. Such allegations satisfy the requirement that the plaintiff show that the conduct occurred because of her sex.
IV. "Severe or Pervasive"
We turn next to the requirement that the alleged harassing conduct be "severe or pervasive." We emphasize that it is the harassing conduct that must be severe or pervasive, not its effect on the plaintiff or on the work environment. Ellison v. Brady,
The disjunctive "severe or pervasive" standard is in conformity with federal Title VII law. The United States Supreme Court in Meritor held that "for sexual harassment to be actionable, it must be sufficiently severe or pervasive" to cause the requisite harm. 477 U.S. at 67, 106 S.Ct. at 2405, 91 L.Ed.2d at 60 (emphasis added). We specifically reject the "regular and pervasive" standard created in Andrews, supra,
The fact patterns of many reported cases suggest, however, that most plaintiffs claiming hostile work environment sexual harassment allege numerous incidents that, if considered individually, would be insufficiently severe to state a claim, but considered together are sufficiently pervasive to make the work environment intimidating or hostile. "[T]he required showing of severity or seriousness of the harassing conduct varies inversely with the pervasiveness or frequency of the conduct." Ellison, supra, 924 F.2d at 878.
Rather than considering each incident in isolation, courts must consider the cumulative effect of the various incidents, bearing in mind "`that each successive episode has its predecessors, that the impact of the separate incidents may accumulate, and that the work environment created may exceed the sum of the individual episodes.'" Burns v. McGregor Elec. Indus.,
V. The Requisite Level of Harm
We next consider the level of harm a plaintiff must show to state a valid hostile work environment LAD claim. This is a subject on which there has been considerable disagreement among the federal courts. The United States Supreme Court has granted certiorari to resolve the split among the
On one side of the split are those circuits that hold that in order to state a claim of hostile work environment sexual harassment, the plaintiff must allege conduct that "had the effect of unreasonably interfering with the plaintiff's work performance and creating an intimidating, hostile, or offensive work environment that affected seriously the psycho logical [sic] well-being of the plaintiff * * *." Rabidue v. Osceola Refining Co.,
The courts on the other side of the split hold that a plaintiff must show that the complained-of conduct was "sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment." Ellison, supra, 924 F.2d at 876; accord Meritor, supra, 477 U.S. at 67, 106 S.Ct. at 2405, 91 L.Ed.2d at 60 ("for sexual harassment to be actionable, it must be sufficiently severe or pervasive to alter the conditions of [the victim's] employment and create an abusive working environment" (citations omitted)); Kotcher v. Rosa & Sullivan Appliance Ctr.,
We find the latter line of cases more consistent with the purposes of the LAD. Although psychological damage to victims of harassment is one of the harms the LAD seeks to prevent, it is by no means the only one. The Legislature has found that because of illegal discrimination, of which sexual
Sex discrimination and sexual harassment also cause serious economic harms. Dr. Freada Klein, a researcher and consultant to large companies on sexual harassment, has estimated that the cost of sexual harassment for a typical Fortune 500 service or manufacturing company of 23,784 employees is over $6.7 million per year, exclusive of costs of litigation, processing state or federal charges, and destructive behavior or sabotage. The $6.7 million figure derives from the costs of employee turnover, absenteeism, reduced productivity, and the use of internal complaint mechanisms. The Civil Rights Act of 1991: Hearings on H.R. 1 Before the House Committee on Education and Labor, 102nd Cong., 1st Sess. 168, 207-214 (1991) (statement of Dr. Freada Klein) (hereinafter Klein). That harm to the productivity and profitability of corporations necessarily harms the economy of the State and the welfare of its citizens.
Moreover, the Legislature has declared that discrimination is "a matter of concern to the government of the State, and that such discrimination threatens not only the rights and proper privileges of the inhabitants of the State but menaces the institutions and foundation of a free democratic State." N.J.S.A. 10:5-3.
Given the breadth of individual and societal harms that flow from discrimination and harassment, to limit the LAD's application to only those cases in which the victim suffered, or could have suffered, serious psychological harm would be contrary to its remedial purpose. We find no support in the statute for
Of course, if a plaintiff suffers psychological harm and wishes to collect damages for that injury, she must show that she suffered psychological harm and to what extent. However, that proof goes to the amount of her damages, not to whether she states a cause of action.
Nor need a plaintiff show that she suffered an economic loss. The plaintiff's injury need be no more tangible or serious than that the conditions of employment have been altered and the work environment has become abusive. Although the LAD provides for compensatory and punitive damages, it is not primarily a tort scheme; rather, its primary purpose is to end discrimination. Because discrimination itself is the harm that the LAD seeks to eradicate, additional harms need not be shown in order to state a claim under the LAD. In a claim of hostile work environment sexual harassment, the hostile work environment is the legally recognized harm. Therefore, a plaintiff in a hostile work environment sexual harassment case establishes the requisite harm if she shows that her working conditions were affected by the harassment to the point at which a reasonable woman would consider the working environment hostile.
In making that showing, the plaintiff may use evidence that other women in the workplace were sexually harassed.
Accord Hall v. Gus Constr.,
VI. The Reasonable Woman Standard
In evaluating whether the harassment alleged was sufficiently severe or pervasive to alter the conditions of employment and to create a hostile or intimidating work environment for a female plaintiff, the finder of fact shall consider the question
We choose an objective standard, first, because as we explained above, the LAD is not primarily a tort scheme but rather is aimed at eradicating discriminatory conduct. An objective reasonableness standard better focuses the court's attention on the nature and legality of the conduct rather than on the reaction of the individual plaintiff, which is more relevant to damages.
Secondly, an objective standard provides flexibility. As we noted above, much conduct that would have been considered acceptable twenty or thirty years ago would be considered sexual harassment today. As community standards evolve, the standard of what a reasonable woman would consider harassment will also evolve.
However, incorporating community standards through the use of a reasonableness standard brings dangers against which courts must guard. We emphasize that the LAD is remedial legislation. Its very purpose is to change existing standards of conduct. Thus, the reasonableness requirement must not be used to hold that the prevailing level of discrimination is per se reasonable, or that a reasonable woman would expect sexual harassment on entering a historically male-dominated workplace. The LAD is designed to remediate conditions of hostility and discrimination, not to preserve and immunize pre-existing hostile work environments.
Thirdly, we choose an objective rather than a subjective viewpoint because the purpose of the LAD is to eliminate real discrimination and harassment. "It would not serve the goals of gender equality to credit a perspective that was pretextual or wholly idiosyncratic." Kathryn Abrams, Gender Discrimination and the Transformation of Workplace Norms, 42 Vand. L.Rev. 1183, 1210 (1989). A hypersensitive employee might
Conversely, an extraordinarily tough and resilient plaintiff might face harassing conduct that was, objectively viewed, sufficiently severe or pervasive to make the working environment hostile or intimidating, but because of her toughness, she might not personally find the workplace hostile or intimidating. Under our objective standard, such a plaintiff would state a claim even if she personally did not experience the workplace as hostile or intimidating. Sexual harassment is illegal even if the victim is strong enough not to be injured. Because such tough employees are perhaps the most likely to be strong enough to challenge harassers, the remedial purposes of the LAD are furthered by permitting claims by emotionally resilient plaintiffs without regard to subjective injury.
Of course, the subjective reaction of the plaintiff and her individual injuries remain relevant to compensatory damages. However, a plaintiff's subjective response is not an element of a hostile work environment sexual harassment cause of action.
We emphasize that only claims based on the idiosyncratic response of a hypersensitive plaintiff to conduct that is not objectively harassing would be barred by the reasonable woman standard. The category of reasonable women is diverse and includes both sensitive and tough people. A woman is not unreasonable merely because she falls toward the more sensitive side of the broad spectrum of reasonableness. Nor should "reasonable" be read as the opposite of "emotional." Perhaps because "reasonable" contains the word "reason," some have interpreted reasonableness as requiring a Vulcan-like rationality and absence of feeling. The reasonable woman standard should not be used to reject as unreasonable an emotional
We turn now to our reasons for choosing a gender-specific standard. We believe that in order to fairly evaluate claims of sexual harassment, courts and finders of fact must recognize and respect the difference between male and female perspectives on sexual harassment. The reasonable person standard glosses over that difference, which is important here, and it also has a tendency to be male-biased, due to the tendency of courts and our society in general to view the male perspective as the objective or normative one.
Although there is far from a uniform female perspective on sexual harassment, nonetheless, the research and literature on sexual harassment suggest that there are differences in the way sexual conduct on the job is perceived by men and women. Kathryn Abrams argues that men consider sexual comments and conduct as "comparatively harmless amusement." Abrams, supra, 42 Vand.L.Rev. at 1203 (citing Barbara Gutek, Sex and the Workplace 47-54 (1985)). When sexual comments or conduct are directed at them, men are apt to find it harmless and perhaps even flattering, but they are unlikely to consider it insulting or intimidating. Id. at 1206. Women, on the other hand, are more likely to find sexual conduct and comments in the workplace offensive and intimidating. Ibid. Abrams is speaking here only about heterosexual sexual harassment; she notes that "[t]hese conclusions might be different if a man were harassed by a gay male employer or supervisor." Id. at 1206 n. 97. Indeed, our general observation of a current social debate suggests to us that many men find the prospect of sexual harassment by other men extremely insulting and intimidating and not at all a "comparatively harmless amusement."
Second, in many areas of the workforce, women still represent a minority and are relatively recent entrants into the field. Because of their predominantly junior and minority status, for some women it is more difficult than it is for men to win credibility and respect from employers, coworkers, and clients or customers. That can make women's position in the workplace marginal or precarious from the start. Sexual harassment operates to further discredit the female employee by treating her as a sexual object rather than as a credible coworker. That can both undermine the woman's self-confidence and interfere with her ability to be perceived by others as a capable worker with the potential to advance and succeed. Abrams, supra, 42 Vand.L.Rev. at 1208-09. Because of women's different status in the workplace, conduct that may be "just a joke" for men may have far more serious implications for women.
Those and other differences between the experiences of men and women shape the different perspectives of men and women. Finders of fact applying the gender-specific reasonableness standard must understand and respect those different perspectives.
VII. Employer Liability
If a plaintiff establishes that she was sexually harassed by her supervisor, then the question remains whether the employer
Today, therefore, we must decide what standards to apply to assess employer liability not only for equitable remedies but also for compensatory damages and punitive damages. The Appellate Division unanimously agreed that employers should be strictly liable for all equitable damages and relief arising from hostile work environment claims, and that an employer should not be automatically liable for punitive damages resulting from hostile work environment sexual harassment by a supervisor. However, the Appellate Division was unable to agree on the employer's liability for compensatory damages in a supervisory hostile work environment claim. One judge would impose strict liability on an employer for such compensatory damages, 255 N.J. Super. at 641,
When the LAD dealt primarily with equitable relief, there was little need to address the issue of employer liability for wrongful conduct of a supervisor. The LAD's remedial purpose of eliminating discrimination and harassment in the workplace was served by holding the employer directly responsible,
However, different considerations apply to determine the proper standards of employer liability for compensatory and punitive damages. Unlike the situation with equitable damages, the employer is not necessarily the only one capable of providing compensatory relief and is not necessarily the party whose conduct is sufficiently outrageous to warrant punitive damages. Moreover, the Legislature, in amending the LAD to allow "all remedies available in common law tort actions," implied that "common law rules of liability, including general principles of agency law" should apply. Lehmann v. Toys `R' Us, supra, 255 N.J. Super. at 660,
The majority did not expand on how agency principles would be applied to sexual harassment cases. However, later lower court cases have interpreted Meritor as holding that employer liability is governed by strict liability in quid pro quo cases and by agency principles in hostile work environment cases.
Justice Marshall wrote a separate concurring opinion in Meritor, in which Justices Brennan, Blackmun, and Stevens joined. The minority would have adopted the strict liability standard. 477 U.S. at 74, 106 S.Ct. at 2409, 91 L.Ed.2d at 64 (citing 29 C.F.R. § 1604.11(c) (emphasis added)). The concurrence rejected the distinction between quid pro quo and hostile work environment cases urged by the Solicitor General. The minority found that position "untenable," explaining that
Justice Stevens also joined in the majority opinion. He wrote a separate concurrence, which stated in its entirety: "Because I do not see any inconsistency between the two opinions, and because I believe the question of statutory construction that Justice Marshall has answered is fairly presented by the record, I join both the Court's opinion and Justice Marshall's opinion." Id. at 73, 106 S.Ct. at 2409, 91 L.Ed.2d at 64.
We agree with Justice Stevens that there is no inherent contradiction between the majority's adoption of agency principles and Justice Marshall's observation that a supervisor's delegated authority often goes beyond the power to hire and fire. We are satisfied that agency principles are sufficiently well-established to provide employers with notice of their potential liability and also sufficiently flexible to provide just results in the great variety of factual circumstances presented by sexual harassment cases and to accomplish the purposes of the LAD. Accordingly, we hold that employer liability for supervisory hostile work environment sexual harassment shall be governed by agency principles.
Section 219 of the Restatement (Second) of Agency outlines the liability of a master for the torts of a servant.
Applying those principles, we declare that under § 219(1) an employer whose supervisory employee is acting within the scope of his or her employment will be liable for the supervisor's conduct in creating a hostile work environment. Moreover, even in the more common situation in which the
The determination of whether a supervisor who creates a hostile work environment was aided in accomplishing that tort by the power delegated to him or her to control the day-to-day working environment requires a detailed fact-specific analysis. Specifically, the finder of fact must decide:
When the answer to each of those questions is yes, then the employer is vicariously liable for the supervisor's harassment under § 219(2)(d).
In light of the known prevalence of sexual harassment, a plaintiff may show that an employer was negligent by its failure to have in place well-publicized and enforced anti-harassment policies, effective formal and informal complaint structures, training, and/or monitoring mechanisms. We do not hold that the absence of such mechanisms automatically constitutes negligence, nor that the presence of such mechanisms demonstrates the absence of negligence. However, the existence of effective preventative mechanisms provides some evidence of due care on the part of the employer.
[Klein, supra, at 171.]
Similarly, given the foreseeability that sexual harassment may occur, the absence of effective preventative mechanisms will present strong evidence of an employer's negligence.
Employer liability through agency law may also be found under § 219(2)(a) if the employer intended the conduct. If a plaintiff can show that an employer had actual knowledge of the harassment and did not promptly and effectively act to stop it, liability under that section may be appropriate. However, such conduct would also more clearly qualify as negligence or recklessness, thus triggering liability under § 219(2)(b).
Federal courts have used agency principles to hold employers liable for the acts of their supervisors, even when the acts are outside the scope of employment, in a number of circumstances. In many cases, the courts appear to find vicarious liability using a negligence rubric. Those cases speak of the employer's constructive knowledge and its absence of effective grievance procedures. See EEOC v. Hacienda Hotel,
Other Title VII cases suggest that the basis for finding vicarious liability through agency law was intent, under § 219(2)(b), or, more probably, apparent authority, under § 219(2)(d). In those cases, the harassed employees reasonably believed that the harassment was tolerated by upper management. See Yates, supra, 819 F.2d at 635-36 (vicarious liability where employees had substantiated belief that grievance procedure was ineffective and harasser's conduct tolerated by management).
Both of those situations could give rise to a reasonable inference that the supervisor's harassing conduct was tacitly approved by upper management, thus triggering liability under § 219(2)(d).
Although an employer's liability for sexual harassment of which the employer knew or should have known can be seen to flow from agency law, it also can be understood as direct liability. When an employer knows or should know of the harassment and fails to take effective measures to stop it, the employer has joined with the harasser in making the working environment hostile. The employer, by failing to take action, sends the harassed employee the message that the harassment is acceptable and that the management supports the harasser. See Anderson, supra, 87 Colum.L.Rev. at 1274-75. "Effective" remedial measures are those reasonably calculated to end the harassment. The "reasonableness of an employer's remedy will depend on its ability to stop harassment by the person who engaged in harassment." Ellison, supra, 924 F.2d at 882.
We recognize that although we have declined to hold employers strictly liable for hostile work environment sexual harassment by supervisors, we have created a standard that may often result in employers being held vicariously liable for such harassment. We note that there is an important difference between strict liability and vicarious liability under agency law.
Under agency law, an employer's liability for a supervisor's sexual harassment will depend on the facts of the case. An employer will be found vicariously liable if the supervisor acted within the scope of his or her employment. Moreover, even if the supervisor acted outside the scope of his or her employment, the employer will be vicariously liable if the employer contributed to the harm through its negligence, intent, or apparent authorization of the harassing conduct, or if the supervisor was aided in the commission of the harassment by the agency relationship. Thus, an employer can be held liable for compensatory damages stemming from a supervisor's creation of a hostile work environment if the employer grants the supervisor the authority to control the working environment and the supervisor abuses that authority to create a hostile work environment. An employer may also be held vicariously liable for compensatory damages for supervisory sexual harassment that occurs outside the scope of the supervisor's authority, if the employer had actual or constructive notice of the harassment, or even if the employer did not have actual or constructive notice, if the employer negligently or recklessly failed to have an explicit policy that bans sexual harassment and that provides an effective procedure for the prompt investigation and remediation of such claims.
Concerning punitive damages, we agree with the Appellate Division that a greater threshold than mere negligence should be applied to measure employer liability. Punitive damages are to be awarded "when the wrongdoer's conduct is especially egregious." Leimgruber v. Claridge Assocs.,
Essentially, we view the issue of the scope of an employer's liability for compensatory and punitive damages as a question of public policy. Arguments abound on both sides of the issue. We view the crucial issue to be which position provides the most effective intervention and prevention of employment discrimination. The Attorney General, representing the New Jersey Division on Civil Rights, recommends that general agency principles of common law be applied. The Division on Civil Rights, as the agency that enforces the LAD, is entitled to great deference, especially when its position is supported by the statutory language and is consistent with the history of the LAD and in conformity with the United States Supreme Court and most courts that have discussed this issue.
Courtrooms are not the best place to prevent or remedy a hostile work environment.
The most important tool in the prevention of sexual harassment is the education of both employees and employers. Consensus among employees and employers should be the goal. We think that providing employers with the incentive not only to provide voluntary compliance programs but also to insist on the effective enforcement of their programs will do much to ensure that hostile work environment discrimination claims disappear from the workplace and the courts.
To summarize, in determining an employer's liability for compensatory and punitive damages when an employee raises a hostile work environment discrimination claim against a supervisor, a three-part standard should be employed. First, strict liability should apply for relief that is equitable in nature. Second, agency principles, which include negligence, should be applied to decide if an employer is liable for compensatory damages that exceed that equitable relief. Third, a higher level of culpability than mere negligence should be required for punitive damages. The issue of Toys 'R' Us's liability should
The judgment of the Appellate Division is affirmed as modified. The matter is remanded for findings of fact and further proceedings consistent with this opinion.
For modification, affirmance and remandment — Chief Justice WILENTZ, and Justices CLIFFORD, O'HERN, GARIBALDI and STEIN — 5.
Opposed — None.
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