This year marks the 25th anniversary of the New Jersey Supreme Court's decision in Lehmann v. Toys R Us, 132 N.J. 587 (1993), which held that the New Jersey Law Against Discrimination (NJLAD) prohibits “sexual harassment of women by men, men by women, men by men, and women by women … and bars both heterosexual and homosexual harassment.” Id. at 604. The “paramount objective” the Supreme Court identified in Lehmann was “the prevention of sexual harassment.” Aguas v. State, 220 N.J. 494, 522 (2015). As evidenced by the #MeToo movement and almost daily reports of abuse by high profile figures, sexual harassment remains an ongoing challenge for employees and employers. This Valentine's Day, unwanted expressions of “love,” gag gifts that have sexual overtones, and discussions of romantic Valentine's celebrations may be particularly dangerous. While relationships do have a place in business, it's best to keep them strictly professional.

Every employer should use the current heightened awareness to reinforce its commitment to prevention of sexual harassment in the workplace and reexamine its policies and procedures to determine whether they provide an effective means to encourage and address sexual harassment allegations. The Supreme Court has provided employers with a strong incentive to take “meaningful and effective” steps to prevent and correct hostile environment sexual harassment in the workplace—an affirmative defense to liability where the harassment that does not culminate in a “tangible employment action, such as discharge, demotion or undesirable reassignment.” Id. at 522-23 (internal quotation marks omitted). For an employer to qualify for the defense, there must be an “unequivocal commitment from the top that [the employer's opposition to sexual harassment] is not just words[,] but backed up by consistent practice.” Id. at 522 (quoting Lehmann, 132 N.J. at 626). It is incumbent on the employer “to unequivocally warn its workforce that sexual harassment will not be tolerated, to provide consistent training, [] to strictly enforce its policy,” and “to provide 'meaningful and effective policies and procedures for employees to use in response to harassment.'” Id. at 522-23. “An employer that implements an ineffective anti-harassment policy, or fails to enforce its policy, may not assert the affirmative defense.” Id. at 523.

As the Supreme Court noted, the implementation of an effective policy also provides a motivation for the employee “to report the offense internally, and thereby enable his or her employer to take immediate action against a harassing supervisor or coworker.” Id. Recent publicity regarding sexual harassment should further encourage employees to come forward and report inappropriate workplace conduct. When that happens, employers must be prepared to thoroughly and promptly investigate the complaints and respond with appropriate remedial action to end it.

In addition to longstanding judicial enforcement of existing anti-discrimination statutes, recent reports of serial predatory sexual misconduct by powerful figures have also resulted in legislative efforts to ban non-disclosure provisions in agreements settling sexual harassment claims. For example, under the recently enacted federal tax reform law, no tax deduction can be taken for any payment made in settling sexual harassment claims if the payment is subject to a non-disclosure agreement. This provision obviously prevents employers from deducting the settlement amount if it is covered by a non-disclosure agreement, but it will also have the effect of precluding employees from deducting the attorney fees they incur in asserting their sexual harassment claim.

A bill recently introduced in the New Jersey Legislature is even more restrictive and puts into jeopardy non-disclosure clauses in settlement agreements. Specifically, it provides that any agreement that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment, or that has the purpose or effect of concealing details relating to a claim of discrimination, retaliation or harassment is a violation of public policy and unenforceable. The hope, of course, is that the threat of damaging and possibly career-destroying publicity will discourage sexual harassment and other forms discrimination.

Notwithstanding the laudable intentions of the proposed legislation, the possibility of unintended consequences should be carefully considered. The Supreme Court itself has observed that “confidentiality is an important component of any policy designed to maximize reporting of alleged sexual harassment.” Payton v. N.J. Tpke. Auth., 148 N.J. 524, 541 (1997). Often, it is in the best interest of both employer and employee to resolve an allegation of sexual harassment in a confidential manner. A victimized employee may not come forward without an assurance of confidentiality, out of fear of retaliation or embarrassment, however misplaced.

By the same token, employers will have less incentive to settle allegations of sexual harassment and more incentive to challenge them, if for no other reason than to clear the company name by litigating a case to judgment. Claims that might otherwise have been quickly settled, permitting the employee an early resolution and an opportunity to move on, will as a consequence drag out publicly in the court system. Already overburdened court dockets will be weighed down with cases that would otherwise have settled, and the possibility of protracted public litigation will supply reluctant employees with an additional incentive to keep quiet, when the public policy should be to encourage them to come forward and be part of the effort, as the Supreme Court has so often put it, to “eradicate the cancer of discrimination.”

Gousman is the managing partner of Fisher Phillips' New Jersey office in Murray Hill. She has devoted her extensive career to the practice of labor and employment law.