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Damages in Employment Discrimination Cases

by mjpospis on June 13, 2013

in Articles, Damages, Employment Discrimination

People who contact me regarding an employment discrimination claim that they are interested in pursuing invariably ask two questions: (1) Do I have a case? (2) What is my case worth?

The first question relates to the question of liability, while the second relates to the question of damages. As in any legal case, in order to recover, a plaintiff must prove both liability and damages. Damages without liability results in no remedy, and liability with no or minimal damages may not be worth pursuing. Here I will address the issue of damages.

Overview

Determining – or, more precisely, evaluating or estimating – the “value” or “worth” of an employment discrimination case is more art than science. There is no mechanical or mathematical formula that will produce a precise number.

Generally, monetary relief available to employment discrimination victims can be grouped into the following categories:

  1. Economic damages,
  2. Compensatory damages (including emotional distress damages),
  3. Punitive damages,
  4. Liquidated damages, and
  5. Attorney fees.

While not addressed here, various laws provide, in addition to monetary recovery, for non-monetary remedies (such as reinstatement and an injunction against further unlawful acts).

What Statute Applies?

Initially, whether and the extent to which each type of remedy is available depends on the applicable statute(s).

For example:

  • The New York State Human Rights Law (NYSHRL) provides for neither attorney fees nor punitive damages but provides for “uncapped” compensatory damages;

Navigating this statutory maze is critical, since the nature and extent of remedies available will inform the decision as to whether, and to what extent, it makes sense to pursue an employment discrimination claim. For example, a case with relatively low economic and/or compensatory damages may not be worth pursuing if neither attorney fees nor punitive damages are recoverable.

Categories of Monetary Relief

In general, the goal of the law is to put the victim of discrimination in the same position in which he or she would have been if the discrimination did not occur.

1)  Economic Damages/Lost Wages

Economic damages, which include “back pay” and “front pay” (together usually referred to as “lost wages”) are the most objective measure of damages.

Back Pay. “Back pay” is, generally speaking, an amount equal to the wages the employee would have earned from the date of discharge to the date of reinstatement, along with lost fringe benefits such as vacation pay and pension benefits. Noel v. New York State Office of Mental Health Cent. New York Psychiatric Ctr., 697 F.3d 209, 213 (2d Cir. 2012).

The purpose of back pay is to completely redress the economic injury the plaintiff has suffered as a result of discrimination; that is, to “make the plaintiff whole.” Upon a finding of discrimination, back pay is the rule, not the exception.

Back pay may be limited (or even equal to zero) if, for example, you are still working at the employer where the discrimination occurred, you get a new job shortly after leaving that employer, you subsequently earn more than you were earning previously, and/or there are factors other than discrimination (such as a mass layoff or a disability) that prevent you from working.

Front Pay. “Front pay” is, generally speaking, an amount awarded for lost compensation during the period between judgment and reinstatement or instead of reinstatement.

It is a discretionary award designed to make victims of discrimination whole where the plaintiff has no reasonable prospect of obtaining comparable alternative employment.

Mitigation. A plaintiff also has a duty to “mitigate” their damages by seeking substitute employment similar to the job from which they were fired. Generally, this means that a plaintiff can’t simply sit back, do nothing, and permit their damages to accumulate.

2)  Compensatory (Including Emotional Distress) Damages

Compensatory damages generally compensate employment discrimination victims for losses such as out-of-pocket expenses caused by the discrimination (such as costs associated with a job search or medical expenses) and any emotional harm suffered (such as mental anguish, inconvenience, or loss of enjoyment of life).

While there is no mechanical formula that will produce a precise value, emotional distress awards are grouped into three categories, in increasing order of value: (1) “garden variety”; (2) “significant”; and (3) “egregious”.

  • In “garden variety” emotional distress claims, the evidence of mental suffering is generally limited to the testimony of the plaintiff, who describes his or her injury in vague or conclusory terms, without relating either the severity or consequences of the injury.
  • “Significant” emotional distress claims are based on more substantial harm or more offensive conduct, and are sometimes supported by medical testimony and evidence, evidence of treatment by a healthcare professional and/or medication, and testimony from other, corroborating witnesses.
  • “Egregious” emotional distress claims generally involve either outrageous or shocking discriminatory conduct or a significant impact on the victim’s physical health.

Factors affecting the amount of emotional distress damages include:

  • the extent to which the discrimination affected plaintiff’s mental and physical health;
  • the egregiousness of the defendant’s conduct (i.e., the extent to which it was humiliating or degrading);
  • whether plaintiff exhibited physical symptoms, such as sleeplessness, loss of appetite, or weight loss;
  • whether plaintiff saw a medical or psychological professional;
  • whether plaintiff took medication; and
  • the extent to which events other than the discrimination affected the plaintiff.

The amount of damages that may be obtained in any given case is heavily fact-dependent.

3)  Punitive Damages

Punitive damages are designed to punish an employer who has engaged in particularly malicious or reckless acts of discrimination.  They are recoverable for violations of various statutes, including Title VII and the NYCHRL.

Such damages may be awarded under Title VII (per the Civil Rights Act of 1991) and the NYCHRL where the defendant has engaged in intentional discrimination and has done so with malice or with reckless indifference to the federally protected rights of an aggrieved individual.

This is established either where the employer (1) discriminated or retaliated against the plaintiff with conscious knowledge it was violating the law, or (2) engaged in egregious or outrageous conduct from which an inference of malice or reckless indifference could be drawn.

In this context, malice and reckless indifference refer to the defendant’s knowledge that it may be acting in violation of law, rather than its awareness that it is engaging in discrimination.

Courts generally consider three “guideposts” in assessing punitive damages:

  1. The degree of reprehensibility of the defendant’s misconduct;
  2. The disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and
  3. The difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

In employment discrimination cases, eligibility for punitive damages is characterized in terms of a defendant’s motive or intent, and defendant’s “reprehensible conduct” is measured by the defendant’s “malice or recklessly indifferent” state of mind. Key cases on this issue are the Supreme Court’s decisions in BMW v. Gore, 517 U.S. 559 (1996) and Kolstad v. Am. Dental Ass’n, 527 U.S. 526 (1999).

Under Title VII, the amount of compensatory damages and punitive damages (taken together) is “capped”, depending on the number of employees the employer has. These limits are:

  • $50,000 for employers with 15-100 employees;
  • $100,000 for employers with 101-200 employees;
  • $200,000 for employers with 201-500 employees; and
  • $300,000 for employers with more than 500 employees.

There is no such cap under the NYCHRL.

4)  Liquidated Damages

Liquidated damages are damages set by statute.  They are available under, for example, the ADEA, the Equal Pay Act of 1963, and the Family and Medical Leave Act of 1993 (FMLA).

Under the ADEA, a prevailing plaintiff is entitled to liquidated damages in an amount equal to unpaid wages, but only where there was a “willful violation” of the statute.

Such a violation will be found to exist either where the defendant knew that its conduct violated federal law or showed reckless disregard of that fact.

Willfulness has been found, for example, where there is evidence of intentional discrimination and a “calculated subterfuge to support an adverse employment action”.  That is what happened in, for example, Cross v. NYC Transit Authority, where plaintiff’s supervisors “made age-hostile remarks to and about [plaintiffs and] deliberately afforded these men less training than younger [workers] in order to have an excuse to demote them”.

As with other issues, the question of willfulness is heavily fact-dependent.

5)  Attorney Fees

In many cases, under the so-called “American Rule”, a prevailing party cannot recover attorneys’ fees from the losing party.  One exception to this rule is where a statute specifically provides for the award of attorney fees.

For example, Title VII, the ADEA, the ADA, the FMLA, 42 U.S.C. § 1981, and the NYCHRL (but not the NYSHRL) authorize the court to allow a prevailing party a reasonable attorney fee.

The goal of statutory attorney fees is to encourage plaintiffs to bring meritorious suits by providing them with a source of funds for retaining competent counsel.

Various issues – such as whether the plaintiff is a “prevailing party” and what is a “reasonable” attorney fee – require careful analysis.

Additional Resources

If you have any questions about any of the above issues, please don’t hesitate to contact us today.

Categories: Articles, Damages, Employment Discrimination

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