A New Jersey appeals court has upheld a contract requiring a woman alleging sexual harassment and hostile working conditions to arbitrate her claims, but said she must be allowed to pursue punitive damages in those proceedings.

The Appellate Division panel said Aug. 23 in Roman v. Bergen Logistics that plaintiff Milagros Roman knowingly assented to the arbitration requirement in September 2015, when she was hired by Bergen Logistics of North Bergen.

But, the court said, “An agreement barring the recovery of punitive damages to victims of employment discrimination under the [Law Against Discrimination] allows an employer's upper management to be willfully indifferent to the most egregious forms of discriminatory conduct without fear of punishment and without the incentive to stop or prevent the discriminatory conduct that the availability of punitive is intended to provide.”

According to the decision, Roman, a human resources generalist, was fired in December 2015 after repeatedly claiming that she had been subjected to sexual harassment by her supervisor, Gregg Oliver, the director of human resources, and that she was forced to work in a hostile work environment.

She filed a lawsuit in Bergen County Superior Court. A judge, however, dismissed her lawsuit on summary judgment, saying she was bound by the arbitration agreement she signed when she began working at Bergen Logistics.

The arbitration agreement contained a clause that barred plaintiffs from seeking punitive damages under the Law Against Discrimination.

That clause was unenforceable because it ran against the public policy, said Appellate Division Judges Allison Accurso, Amy O'Connor and Francis Vernoia in the unpublished decision.

“We are persuaded that the arbitration agreement's bar on punitive damages claims is unenforceable because it violates the public policy of the LAD,” the judges said in the per curiam ruling.

The panel noted that the Legislature amended the LAD in 1990 to ensure that punitive damages are available to anyone who asserts a claim under the statute.

“The availability of punitive damages saves the LAD's public policy of eradicating employment discrimination by focusing on the deterrence and punishment of particularly serious conduct by certain employees,” the court said.

“In our view, a contract provision barring an employee's access to punitive damages under the LAD not only violates public policy by eliminating a remedy the Legislature expressly declared is available to all victims of discrimination … it also eviscerates an essential element of the LAD's purpose—deterrence and punishment of the most egregious discriminatory conduct by employees who, by virtue of their position and responsibilities … control employer policies and actions that should prevent discriminatory conduct in the workplace,” the panel said.

Roman is represented by Peter Valenzano of Mashel Law in Morgantown.

“We are pleased the court endorsed our view that punitive damages are available and that clauses barring punitive damages claims are unenforceable,” he said, adding that he and his client are prepared for arbitration.

Bergen Logistics was represented by Jessica Sussman of the Morristown office of Jackson Lewis. Oliver was represented by Kyle Wu of the Philadelphia office of Margolis Edelstein. Neither returned a call seeking comment.