It has been the practice of the Borough of North Haledon to defend lawsuits against employees which arise out of the good faith performance of official duties and to pay any judgment against an employee which he or she incurs in the good faith performance of official duties. The purpose of this chapter is to define clearly the circumstances under which the Borough of North Haledon will defend lawsuits against employees and the terms on which the borough will indemnify employees against any judgments arising out of official duties. The duty to defend and indemnify employees, as defined in this chapter, supersedes all prior customs and practices regarding the defense and indemnification of employees.
[HISTORY: Adopted by the Mayor and Council of the Borough of North Haledon 2-21-2024 by Ord. No. 6-2024. Amendments noted where applicable.]
As used in this chapter, the following terms shall have the meanings indicated:
Any officer or employee of the Borough of North Haledon, whether elected or appointed, except employees of the North Haledon Police Department entitled to a legal defense under N.J.S.A. 40A:14-28 and 40A:14-155.
Includes any civil action against an employee before any court or administrative body of competent jurisdiction, either state or federal, whether brought by way of complaint, cross-claim or counterclaim. The term "legal action" does not include criminal or quasi-criminal actions, whether brought by complaint or indictment.
Except as provided in § 27-4, the Borough of North Haledon shall provide for the defense of any legal action against an employee arising out of an act or omission within the scope of employment, provided that the employee:
A.
The Borough of North Haledon may refuse to provide for the defense of a legal action against an employee if he or she determines that:
(1)
The act or omission was not within the scope of employment;
(2)
The act or omission was one of fraud, actual malice, willful misconduct or one that would constitute a crime or offense under N.J.S.A. 2C:1-1 et seq., federal criminal law or an act committed in another state that would constitute a crime or offense under N.J.S.A. 2C:1-1 et seq.
(3)
Legal defense provided by the Borough of North Haledon would create a conflict of interest between the borough and the employee;
(4)
The employee has failed to cooperate fully with the Borough of North Haledon in his or her defense;
(5)
The employee failed to request a legal defense; or
(6)
The action was brought by the Borough against the employee.
B.
Under circumstances where the factual predicate for a legal action against an employee cannot be ascertained with certainty, the Borough of North Haledon may, in the exercise of its discretion, provide for the defense of a legal action against an employee under a reservation of rights. If the Borough of North Haledon later determines that the employee is not entitled to a legal defense at the borough's expense, the Borough Attorney shall so notify the employee in writing and the borough's obligation to provide a defense for the employee shall cease.
A.
The Borough of North Haledon may at its option provide for legal defense of an employee by:
B.
No employee shall be reimbursed for the expenses of a legal defense unless the Borough of North Haledon has agreed in writing to the amount of reimbursement before the employee incurs any expenses in his or her defense.
Whenever the Borough of North Haledon's Counsel provides for the defense of an employee, he or she may assume exclusive control over the employee's defense, and the employee shall cooperate fully with the Borough's Counsel's defense.
C.
Notwithstanding any other provision of this chapter, the Borough will not indemnify, pay or reimburse an employee for any judgment entered against them in a legal action if it is determined that the basis for such judgment was an unlawful exercise of the employee's official duties, including, but not limited to, conduct that constitutes discrimination, harassment, retaliation or any intentional tort. This prohibition on indemnification also includes conspiracy to and/or aiding and abetting of an unlawful exercise of another employee's official duties as described above. The Borough may, however, indemnify, pay or reimburse an employee for a judgment entered against them in such a legal action if, in the opinion of the Borough Counsel, the act or omission upon which the judgment was entered was not an unlawful exercise of the employee's official duties as described above.
D.
Nothing in this section shall authorize the Borough to pay punitive or exemplary damages assessed against an employee or any damages resulting from the commission of a crime, actual malice, actual fraud or willful misconduct.