United States: New Jersey Supreme Court Opens The Door To Employee Retaliation Lawsuits Based Upon Post-Employment Employer Conduct

Originally published February 2010

Important Issues Raised By Roa

In January 2010, the Supreme Court of New Jersey, in Roa and Roa v. LAFE, ruled that employees cannot use more recent acts of alleged discrimination to revive acts of discrimination more than two years old, if the prior acts were themselves sufficient to put an employee on notice of a potential claim. The Court also ruled, however, that retaliation occurring after an employee is terminated is actionable even though the retaliation no longer effects the ex-employee's present or future employment. Roa is a split decision for employers.

On one hand, the ruling confirms that some harassment and discrimination claims under New Jersey's Law Against Discrimination ("LAD") can be time-barred even if harassment and discrimination continues. A modest "win" for employers. On the other hand, allowing post-termination retaliation claims under the LAD opens the door to greater liability and damages, including a Plaintiff's attorney's costs, fees, and a fee multiplier. A significant "loss" for employers. Now more than ever, employers must establish policies and procedures to ensure that company employees are not taking unwarranted adverse action against an employee after termination.

Specifics Of Roa

Under the LAD, employees have a two-year timeframe within which to bring state discrimination and harassment cases to court. However, it was not always clear when the two-year clock begins to run, and whether the clock resets if there are subsequent acts of discrimination or harassment. Also unclear was whether an employee could claim retaliation for something the employer did to them after the employee was terminated.

In Roa, plaintiffs, husband and wife, each alleged that they were illegally discharged because of their opposition to gender discrimination in the workplace. The wife was discharged on August 4, 2003, and the husband on October 3, 2003. The husband also claimed post-discharge retaliation in the form of improper back-dating of the termination of his employer-provided health insurance. The back-dating occurred shortly after his discharge, but the husband claimed he did not become aware of it until November 11, 2003.

Plaintiffs did not file their complaint with the Court until November 3, 2005 — more than two years after they were fired, and more than two years after the post-discharge retaliation, but within two years of the husband's alleged first notice of the post-discharge retaliation.

The trial court dismissed the complaint, holding, under the LAD, that the discharges were time-barred, and that the post-discharge claim was not actionable because it occurred after the employee was fired and, therefore, did not constitute an "adverse employment" action. The Appellate Division affirmed the discharge claims, but held that the husband's post-discharge claim was actionable under the LAD even though it did not involve current or future employment because, under the "continuing violation" theory, it was the last act of a series of alleged illegal actions by the employer. The New Jersey Supreme Court affirmed the results of the Appellate Division, although, as to the post-discharge claim, on different grounds.

First, as to the discharge claims, the Supreme Court clarified that any alleged illegal "discrete" act that was sufficient to place an employee on notice of his or her claim triggered the two-year statute of limitations under the LAD, even if there were subsequent alleged acts of misconduct. Therefore, an employee would have to bring a claim based upon that discrete conduct within two years of its occurrence, and could not use the "continuing violation" theory to extend the time to file.

The Court explained that the "continuing violation" theory was not designed to allow an employee to revive time-barred claims of which they should have been aware.

Instead, that theory was designed for circumstances in which there was an ongoing series of discriminatory or retaliatory acts of which any one such act in isolation might not be sufficient to establish notice of a claim. Accordingly, the Court affirmed the lower courts' position that the claims based upon the discharges were barred by the two-year statute of limitations.

The Court also affirmed the Appellate Division's conclusion that the husband's post-discharge retaliation claim was actionable. First, the Court explained that the claim would be timely if it was true that he was not notified of the change until the November 11th date. Relying on New Jersey's "discovery rule," which provides an exception to the statute of limitations, the Court explained that the statute of limitations cannot be used to bar claims that an employee reasonably did not know existed. Instead, the two years would be measured from the date of notice.

Second, assuming that the post-discharge claim was therefore timely, the Court then also held that post-discharge retaliation claims are actionable under the LAD even if they do not involve any adverse employment consequence — not by resort to a "continuous violation" theory, but instead because of the purposes underlying the LAD's prohibition against retaliation. The Court first explained that the prohibition against retaliation differed from the prohibition against direct discrimination. The prohibition against direct discrimination is designed to stop illegal adverse employment consequences, but the prohibition against retaliation is intended to stop conduct that would inhibit a person's efforts to stop direct discrimination. The Court reasoned that a jury could find the back-dating of the husband's health insurance was a punishment imposed because of the husband's report concerning sexual harassment in the workplace, and therefore find it also to be the type of conduct that would inhibit others from seeking enforcement of the LAD's guarantees — even though the retaliation did not itself impact the plaintiff's present or future employment.

Impact Of Roa On Employers

This Supreme Court ruling provides a clear reminder that the statute of limitations remains a strong bar in New Jersey to claims filed more than two years after the conduct at issue, if the conduct was sufficient to have placed a reasonable person on notice of a claim, even if the employee alleges a string of additional subsequent acts of misconduct. It also establishes that any conduct that could be construed as "retaliatory" under the LAD may be actionable even if it took the form of something other than an adverse employment consequence. Although employees had non-LAD causes of action for post-termination retaliation before Roa, the remedies section of the LAD provides for more damages than traditional causes of action, such as costs, attorneys' fees, and multipliers — making post termination retaliation claims more enticing to Plaintiff attorneys.

To help protect your company against Roa-type claims, Employers are advised to train their employees to refrain from negative conduct directed toward employees during or after any discharge process. As one example only, employers should consider drafting and implementing neutral post-employment reference policies, and review conduct directed toward a former employee post-termination to determine if such conduct is warranted and equally applied.

If you have any questions or comments about this article or how to best position your company to avoid potential liabilities in this area, feel free to contact Jerry Tanenbaum at 856-482-5222.

www.schnader.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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