Evaluating Damages in Employment Discrimination Cases - ABA YLD 101 Practice Series

By Justin M. Swartz and Anjana Samant

Three words describe the proper recovery for a prevailing plaintiff in an employment discrimination case: make whole relief. Courts will award a prevailing plaintiff whatever it takes, with some limitations, to put her in the position in which she have been were it not for her employer's unlawful conduct. This article is an overview of what a plaintiff's lawyer should consider when evaluating her clients' damages, whether for case evaluation, settlement, or trial.

Rule #1: Don't give up
An unlawfully terminated plaintiff has the duty to mitigate the resulting harm. This means that your wrongfully discharged client must make a "reasonable" effort to find a job comparable to the one from which she was fired. Remind your client to attempt to mitigate and tell her to keep good records of her efforts. Critically, your client is not required to actually find another job or to take one that is not "substantially equivalent" to the one she was denied or lost; she simply must try to get one diligently.

Ultimately, the employer has the burden of proving that your client failed to mitigate. To raise this affirmative defense successfully, the employer must show (1) the plaintiff did not exercise "reasonable diligence" to find comparable employment; and (2) if the plaintiff had expended such efforts, she had a "reasonable likelihood" of finding similar work. If the plaintiff's inability to return to work is the employer's fault, a court may waive the duty to mitigate.

Rule #2: You can't always get what you want
Even if your client prefers monetary relief, reinstatement is the preferred remedy under most anti-discrimination statutes. Courts have the discretion to order reinstatement or to award its monetary equivalent, front pay, instead. Reinstatement is inappropriate where there is a "reasonable basis" for refusing a job with the defendant employer - typically where there is "substantial hostility, above that normally incident to litigation" between the parties, such that there is simply no point in forcing them to work together. Remember - make sure your client does not refuse reinstatement or testify that she would not accept it if offered. Such an admission could bar her entitlement to front pay.

Rule #3: What could have been is better than what can never be at all
Front pay
is an approximation of what your client would have earned in the future, but for the employer's unlawful conduct. Do not confuse front pay with an award for lost earning capacity - if anything, your client can make an entirely separate damages claim based on the latter. Calculating this amount involves making an educated guess based on certain assumptions including your client's future pay rate, the duration of future employment, and the time it would have taken your client to recover from the employer's unlawful conduct. If you can prove that your client will never be able to find a comparable job, front pay can run through retirement. Courts sometimes reduce take a present value discount after calculating the front pay value.

Your client cannot recover front pay if (a) her rejection of reinstatement is not reasonable; (b) she obtains new employment and earns more than she would have with the defendant; or (c) after acquired evidence reveals that, had her employer known about certain conduct, she would have been fired anyway.

Rule #4: Making up for the past
A prevailing plaintiff is entitled to back pay in the amount of the wages and benefits she lost through the date of judgment. Back pay is broad enough to cover anything of monetary value ( e.g., overtime wages, sick leave, vacation, pension benefits, health insurance) that your client would have received between the unlawful termination and one of the following cut-off dates:

  • when the employer makes an unconditional offer of reinstatement;
  • when your client accepts an equal or better paying job with someone else;
  • when your client retires or otherwise stops looking for another job;
  • when judgment is entered; or
  • when your client could have been lawfully discharged.(e.g., with discovery of after-acquired evidence).

If your client can establish entitlement to back pay (by showing an actual financial loss resulting from the employer's misconduct), a presumption arises in favor of making such an award. "Good faith" and difficulty in quantifying are not defenses to back pay. Even after-acquired evidence of plaintiff misconduct severe enough to justify termination or other adverse employment action will not preclude back pay; courts will award back pay until the time such evidence was discovered.

Rule #5: Not everything is priceless
Perhaps the most well-known type of monetary relief is compensatory damages. This award reflects the value ascribed to things otherwise difficult to quantify ( e.g., humiliation, emotional distress, inconvenience, loss of reputation, etc.). While most federal employment laws include an upper limit on the size of a compensatory damages award, many state laws and local do not.

Compensatory damages must be supported by evidence - it is typically not enough that your client is upset. Testimony of a family member or friend is usually sufficient. Although, expert testimony is not necessary, courts tend to reduce larger awards absent medical expert testimony.

Rule #6: "A willful fault is no excuse and deserves no pardon"
As the name suggests, punitive damages are intended to punish an employer for violating the law and to (hopefully) deter it from engaging in such conduct in the future. To obtain punitive damages, your client must show that his or her employer acted with "malice" or in reckless disregard for his or her rights. Note that this means showing that the employer knew that it may have been violating federal law, not the employer's state of mind or intent surrounding its unlawful conduct.

Some federal employment statues limit the size of a punitive award. Such statutory caps aside, the Supreme Court has held that, as a matter of due process, punitive damages must be "reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered." While the Court has refused repeatedly to "impose a bright line ratio which a punitive damages award cannot exceed," it also has stated that, "few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process."

Some statutes punish offending employers through liquidated damages instead of punitive damages, and require a showing of "willfulness." "Willfulness" does not mean "evil intent," but does mean something more than negligent conduct.

Rule #7: Keep accurate time records
If you succeed in prosecuting your client's case, your client can recover "reasonable" fees and costs. Typically, you will have to submit a fee petition consisting of detailed time records, a breakdown of costs, calculation of lodestar, and evidence that your hourly rates are consistent with those in your field and your locale. In arguing that your time and rates are reasonable, it can be helpful to point out that your adversary "found it necessary to spend considerably more money losing than [you] spent winning."

If your records are not detailed enough or are broken down inappropriately, the court will likely slash your fees drastically. Although a fee award includes the time you spend preparing the fee petition, it is highly recommended that you make it easy by keeping accurate, organized contemporaneous records.

Rule #8: Don't forget the interest
Interest may be awarded on your client's damage award and on your fee award. With respect to your client's award, post-judgment interest is available under the general post-judgment interest provision applicable to federal claims. Under this provision, the relevant interest rate is the same as the one-year Treasury Bill rate that was in effect immediately prior to date of judgment.

Pre-judgment interest often may be added to a back pay award, as it is considered part of a plaintiff's "make whole" relief.

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About the Author

Justin M. Swartz and Anjana Samant are attorneys with Outten & Golden LLP in New York, NY. www.outtengolden.com .

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