Damage Caps Under the Civil Rights Act of 1991

• Publication year: 1998
• Pages: 65
• Citation: Vol. 27 No. 3 Pg. 65

27 Colo.Law. 65 Colorado Lawyer 1998.

1998, March, Pg. 65. Damage Caps Under the Civil Rights Act of 1991

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65

Vol. 27, No. 3, Pg. 65

The Colorado Lawyer
March 1998
Vol. 27, No. 3 [Page 65]

Specialty Law Columns
Labor and Employment Review
Damage Caps Under the Civil Rights Act of 1991
by William J. Martinez, Kathleen M. Flynn

Title I of the Civil Rights Act of 1991 ("1991 Act")1 significantly expanded the remedies available to plaintiffs asserting federal employment discrimination claims. Since its enactment, plaintiffs prevailing under Title VII of the Civil Rights Act of 1964 ("Title VII"),2 the Americans With Disabilities Act ("ADA"),3 or § 501 of the Rehabilitation Act of 19734 have been able to seek compensatory and punitive damages against private employers for intentional violations of these statutes.5 Under the 1991 Act, public sector employees may recover compensatory, but not punitive, damage awards.6

The 1991 Act established limits on the amount of compensatory and punitive damages a prevailing plaintiff can recover.7 These caps are a function of the employer's work force size

Number of Employees Damage Caps

15 - 100 $50,000

101 - 200 $100,000

201 - 500 $200,000

501+ $300,000

As this article discusses, questions have arisen on how to calculate the number of employees a defendant has for purposes of the damage caps. Whether part-time employees should be included in the calculation remained an unsettled issue until this year, when it appeared to be answered in the affirmative. The article also examines case law developments concerning the aggregation of employees working for a defendant that consists of multiple business entities in order to increase the applicable limit. Finally, the article addresses whether front pay is a form of future pecuniary loss subject to the statutory caps

Determining the Number Of Employees

Part-Time Employees

In Enforcement Guidance issued in July 1992, the U.S. Equal Employment Opportunity Commission ("EEOC") took the position that part-time employees should be included when counting employees for purposes of the caps on punitive and compensatory damages.8 At the time, the Eighth Circuit in EEOC v. Garden and Associates, Ltd.9 and the Seventh Circuit in Zimmerman v. North American Signal Corp.10 were on record holding that part-time employees should not be counted for purposes of determining whether an employer has the jurisdictional number of employees required by Title VII

In support of its enforcement position, the EEOC pointed to the difference in statutory language between § 102(b)(3) of the 1991 Act11 and § 701(b) of Title VII.12 Section 701(b) requires that an employer have fifteen or more employees "for each working day in each of twenty or more calendar weeks in the current or preceding calendar year."13 [Emphasis supplied.] The EEOC pointed out that, by contrast, § 102(b)(3) does not include the "for each working day" language contained in Title VII. Instead, the 1991 Act states merely that the damage caps apply to employers who have the prescribed number of employees "in each of twenty or more calendar weeks in the current or preceding calendar year."14 Therefore, the EEOC maintained, because the focus is on the number of employees working in the entire week rather than on each day of the week, part-time employees may be counted.15

Employers took issue with the EEOC's enforcement guidance. Because part-time employees did not count for Title VII jurisdictional purposes, defendants argued, part-time employees should be similarly excluded for purposes of the damage caps. Defendants cited the aforementioned Garden and Associates and Zimmerman decisions in support of their view. Plaintiffs countered with Thurber v. Jack Reilly's Inc.,16 wherein the First Circuit held that part-time employees were to be included for purposes of determining Title VII jurisdiction.

The court in Young-Gerhard v. Sprinkle Masonry Inc.17 examined the countervailing positions on this issue. The district court rejected the defendant's contention that Garden and Associates and Zimmerman compelled the exclusion of part-time employees who did not work every work day for purposes of determining the applicable damage cap. The Young-Gerhard court found persuasive the above-referenced difference in the pertinent statutory provisions in the 1991 Act and Title VII. Because Congress did not include the phrase "for each working day" in 42 U.S.C. § 1981A(b)(3), the court reasoned, with respect to the damage caps in the 1991 Act, "the number of employees in a calendar week is what counts in determining the limitation for damages."18

It would appear that whatever continuing viability employers' arguments had in this regard ended with the recent decision of the U.S. Supreme Court in Walters v Metropolitan Educational Enterprises, Inc.19 At issue in...