#7 Genova Burns’ 30th Anniversary Countdown of the Most Influential Cases, Events and Laws

More than 30 years ago, Theresa Lehmann started working as a file clerk at Toys ‘R’ Us. During her tenure, she was promoted and given additional responsibilities. However, when the corporation hired a supervisor that she reported to, Lehmann alleged that the supervisor repeatedly made offensive sexual remarks to her and, on at least one occasion, lifted her shirt and exposed her brassiere. She reported the harassing behavior to management, but when she felt her complaints had fallen on deaf ears, she quit her job. Lehmann subsequently sued Toys ‘R’ Us, claiming that she was subjected to a hostile work environment, under Lehmann v. Toys `R’ Us.

The trial court ruled against Lehmann, finding that her supervisor's conduct did not meet the threshold test of “exceedingly outrageous,” but was merely “annoying.” However, that decision was reversed and remanded back to the trial court by the Appellate Court. Both parties then appealed to the New Jersey Supreme Court, which ruled in Lehmann’s favor, and set new tests to be applied in sexual harassment cases. This decision changed the standard for determining whether harassment is severe enough to create a hostile work environment. The Court held Toys ‘R’ Us liable for the actions of the supervisor. Moreover, the Court included a subjective standard in its analysis, with a consideration toward the perception of a reasonable person of the same sex in plaintiff’s position.

“Sexual harassment, especially in 2019, has no place in the corporate experience, and it is cases such as Lehmann v. Toys `R’ Us that provided the first firm foundations of sexual harassment policy for employers, and employees alike,” said Christopher Zamlout, Associate at Genova Burns. “With an established, cogent and understood workplace harassment policy, employers are in a much better position to prevent and control this type of behavior in the workplace. It also provides immediate response mechanisms, procedures, and remedies to address such behavior before it reaches the courts.”

CASE SUMMARY:

In Lehmann v. Toys `R’ Us, Inc., the Supreme Court ultimately held that an employer may be vicariously liable, in accordance with principles of agency law, for sexual harassment committed by a supervisor resulting in a hostile work environment. The Court found that, when a supervisor acts beyond “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.”

The plaintiff, Theresa Lehmann, was employed by the corporation, Toys ‘R’ Us, as a file clerk and was subsequently promoted to a mid-level supervisory position. Sometime thereafter, Toys ‘R’ Us hired a new supervisor above Lehmann in the corporate structure. This supervisor initiated a period of sexual harassment of female employees, including Lehmann, through offensive, sexually driven comments and unwanted touching.

Lehmann consistently reported these incidents to management, but was repeatedly told to handle the matter herself. After an extended period of reporting these issues, she was told that she was “paranoid.” Lehmann then resolved to complaining to the Executive Vice President, explaining that she felt she was being forced out of the company and, when she was offered an undesirable transfer as a resolution of her complaints, finally offered her resignation.

Lehmann subsequently sued Toys ‘R’ Us arguing that the corporation’s investigation into the harassment was inadequate and created a hostile work environment.

The trial court awarded Lehmann a nominal amount, finding that the supervisor’s liability was limited to one single occurrence of nonconsensual touching. The trial could held that the supervisor’s conduct was not “sufficiently outrageous,” and was merely tantamount to an annoyance. Lehmann appealed the trial court’s decision to the Appellate Division, which, in turn, reversed and remanded the case back to the trial court. Both parties appealed this decision to the New Jersey Supreme Court.
The Supreme Court found that even though Toys ‘R’ Us had a written policy against sexual harassment, management did not keep substantive written records or question key witnesses about events. The Court found that this enabled a hostile work environment and held Toys ‘R’ Us liable.

With the State Supreme Court’s decision came a new test to be applied in sexual harassment matters. The Court changed the standard for proving whether harassment is severe enough to be hostile, and created a four part test by which lower courts could order damages for even a single harassment incident if the episode proved severe. The Supreme Court’s test to determine a hostile work environment due to sexual harassment considers the following:

1. the conduct would not have occurred but for the employee’s gender;
2. the conduct was severe or pervasive;
3. a consideration of the belief of a reasonable person of the employee’s gender; and
4. whether the employment conditions are altered and the working environment made hostile or abusive.

Also as part of the decision, the NJ Supreme Court ruled that an employer could be held “strictly liable” for the sexual harassment of employees, meaning a company could responsible for a plaintiff’s damages even if the employer was not aware that the harassment was taking place or took steps to prevent it from happening.

At the time of Lehmann decision, legal experts agreed that the high court's decision broadened the responsibility of employers to prevent sexual harassment in their workplaces.

What Can Employers Do?

It is of utmost importance that employers put sexual harassment policies in place, publicize them, and establish truly effective complaint procedures and adequate training for employees and supervisors alike. Without such policies, employees who sue will have an open field where the courts will hold employers liable for the conduct of their supervisors – meaning companies will be parting with large sums of money to settle cases or satisfy court judgments based on the conduct of their managers, supervisors, and other high-level employees.