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The NJLAD’s fee-Shifting provision: A ray of hope for employers

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in Discrimination and Harassment,Employment Law,Human Resources,Leaders & Managers,Performance Reviews

Harassment and retaliation claims are on the rise in workplaces across the country. Some cases are legitimate, but many are not. They’re brought by employees seeking to have a court rule on trivial workplace disputes that have no sufficient factual or legal basis.

Now there’s a ray of hope for employers that have been victimized by such frivolous lawsuits. A January decision by the Appellate Division of the Superior Court of New Jersey may help employers recover attorneys’ fees and costs. In the case of Michael v. Robert Wood Johnson University Hospital, the court interpreted the “bad faith” circumstances under which employers that have won New Jersey Law Against Discrimination (NJLAD) cases can recover some of the money they spent defending themselves.

While the Appellate Division cautioned that a court may take into account the economic circumstances of the unsuccessful plaintiff, this decision may provide some measure of respite to employers that are faced with discrimination cases brought in bad faith.

A ‘bad faith’ claim

Alice Michael worked part-time at the Robert Wood Johnson University Hospital for approximately 20 years. Her complaints began shortly after her supervisor initiated a change in the vacation policy. Michael objected to a new rule that said employees requesting vacation more than 35 days in advance had to arrange for someone else to cover their shifts.

This change prompted Michael to file a lawsuit alleging a host of wrongs committed by the hospital—that she was the victim of age discrimination, a hostile work environment, breach of contract and retaliation.

In support of her age discrimination claim, Michael argued that she had not been reimbursed for tuition for two courses, while younger employees had been paid back. But the evidence showed the hospital had in fact reimbursed Michael for more than 30 courses over the years. Michael also complained that the hospital changed its performance evaluation form and her job description. Michael, however, did not suffer any adverse employment action, and instead received every scheduled raise, lost no opportunities for advancement and was never suspended or received any disciplinary action. As to the vacation policy dispute that apparently started it all, Michael admitted the new policy uniformly applied to all members of her department.

All in all, Michael did not present a convincing case in any respect. The court dismissed her case, a ruling that an appeals court upheld.

Talk about reimbursement!

The hospital then asked the court to award attorneys’ fees pursuant to New Jersey’s frivolous claims statute and the NJLAD, which provide for recovery of reasonable attorneys’ fees and costs if the plaintiff’s case was brought in bad faith.

The court agreed with the employer and awarded counsel fees. The Appellate Division reversed and returned the matter back to the trial court to determine whether or not Michael acted in bad faith in bringing her case.

The Appellate Division found that bad faith would require a showing of “a reckless disregard or purposeful obliviousness of the known facts.” The Appellate Division instructed the trial court to consider the extent to which a plaintiff has the ability to pay an award of counsel fees, and also the extent to which a plaintiff pursued the matter because of her own views or desires or relied, either exclusively or partially, upon the advice of counsel.

The Appellate Division cautioned, however, that an award of attorneys’ fees to an employer must be balanced against the strong policy in New Jersey against inhibiting the ability of a plaintiff to file a meritorious civil rights action without fear of suffering a fee award.

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