A. Legal (monetary) Remedies

• Library: South Carolina Damages (SCBar) (2009 Ed.)

A. Legal (Monetary) Remedies

1. Compensatory and Punitive Damages

Compensatory damages in Title VII actions usually consist of pain and suffering, mental distress or anguish, humiliation, sleeplessness, anxiety, stress, and other psychological or emotional damages associated with the discriminatory conduct, as well as lost pay, bonuses, loss of fringe benefits, and out-of-pocket costs.² Title VII plaintiffs can also receive compensatory damages for inconvenience, loss of enjoyment of life and other non-pecuniary losses,³ also referred to as "hedonic damages." In fact, the Civil Rights Act of 1991 specifically allows for the recovery of compensatory damages for "loss of value of life."⁴

At least two circuits, including the Fourth Circuit, have held that medical or other expert testimony is not necessary, and that the plaintiff's testimony alone regarding emotional distress, anxiety, humiliation and other emotional suffering can provide a sufficient evidentiary basis for an award of compensatory damages.⁵ The better practice, however, is to supplement the plaintiff's testimony with additional evidence or testimony because in such cases "courts scrupulously analyze an award of compensatory damages."⁶

Punitive damages may be recovered by a prevailing plaintiff under Title VII against non-public employers who have acted with "malice" or with "reckless indifference to the employee's federally protected rights."⁷ The purpose of punitive damages "is to punish unlawful conduct and to deter its repetition."⁸

In Kolstad v. American Dental Association⁹the Supreme Court held that plaintiffs are not required to show egregious or outrageous discrimination in order to recover punitive damages. Interpreting 42 U.S.C. §1981a's provision that a plaintiff may recover punitive damages if the defendant acted "with malice or with reckless indifference to the federally protected rights of an aggrieved individual," the Court in Kolstad held that "an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages."¹⁰ As the Supreme Court stated, "[t]he terms 'malice' or 'reckless indifference' pertain to the employer's knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination."¹¹

An employer may be held vicariously liable for a punitive damage award for the intentionally discriminatory conduct of its employee, where the employee served the employer in a managerial capacity, committed the intentional discrimination at issue while acting in the scope of employment, and the employer did not engage in good faith efforts to comply with federal law.¹² Supervisors are not liable in their individual capacities for Title VII violations.¹³

Compensatory and punitive damage awards for Title VII litigants are, however, subject to statutory caps. While many practitioners mistakenly believe the cap applies only to an award of punitive damages, the statute provides a cap on compensatory and punitive damages combined. The caps for compensatory and punitive damages are as follows:

1. $50,000.00 for defendants with 15 to 100 employees "in each of twenty or more calendar weeks in the current or preceding calendar year";¹⁴
2. $100,000.00 for defendants with 101 to 200 employees during the twenty week period;¹⁵
3. $200,000.00 for defendants with 201 to 500 employees during the twenty week period;¹⁶ and
4. $300,000.00 for defendants with more than 500 employees during the twenty week period.¹⁷

The "calendar year" refers to the year in which the violation occurred, not the year the judgment is obtained.¹⁸

Both the court and attorneys are prohibited from mentioning the statutory caps on non-economic damages to the jury.¹⁹

A separate cap applies for each complaining party, not each claim.²⁰ These caps do not, however, apply to back pay, front pay,²¹ pre-judgment interest, and other economic losses.²²

The Fourth Circuit has held that a prevailing plaintiff in a Title VII case can recover punitive damages "even in the absence of an award of compensatory damages if back pay has been awarded."²³

The Third Circuit has held that an employee who is the victim of discrimination may recover an additional sum to compensate for the negative tax consequences of receiving a lump sum back pay award.²⁴ Additionally, the Tenth Circuit Court of Appeals has held that in a Title VII class action, "the district court did not abuse its discretion when it included a tax component in the back pay award to compensate class members for their additional tax liability as a result of receiving over seventeen years of back pay in one lump sum."²⁵ Successful plaintiffs would be wise to consider seeking such relief.

2. Back Pay

Back pay is a legal remedy expressly authorized for unlawful employment practices in violation of Title VII.²⁶ The United States Supreme Court has held that back pay fulfills the "primary objective" of Title VII in deterring discriminatory and unlawful employment practices.²⁷ "Back pay is awarded in furtherance of the objectives of Congress in enacting Title VII to create employer incentives to ensure equality of employment opportunities and to make persons whole for injuries suffered on account of unlawful discrimination."²⁸

The Fourth Circuit Court of Appeals has held that back pay should be awarded when the plaintiff has established both discriminatory practices and proof of "identifiable economic injury."²⁹ Simply establishing discrimination on the part of the employer is insufficient, and the plaintiff must still establish a loss of back pay directly attributable to the discrimination. For example, the Fourth Circuit held in Patterson v. Greenwood School District 5 0³⁰that the plaintiff established discrimination but was not entitled to an award of back pay because the evidence indicated the plaintiff would not have been promoted because there were two better qualified candidates available for the position in question.

An award of back pay generally constitutes recovery of any salary, wages, or other compensation from the date of wrongful discharge to the date of judgment. The Fourth Circuit also recognizes "constructive discharge" claims in determining the date from which back pay should accrue. "Constructive discharge occurs when an employer deliberately makes an employee's working conditions intolerable and thereby forces him to quit his job."³¹

In cases where a plaintiff has been wrongfully denied a promotion based upon discrimination, however, the "back pay award should be fashioned to compensate them until they can obtain a job commensurate with their status."³² "This compensation should be supplemented by an award equal to the estimated present value of lost earnings that are reasonably likely to occur between the date of judgment and the time the employee can assume his new position."³³ Alternatively, the court may exercise continuing jurisdiction over the case and make periodic back pay awards until the workers are promoted to the jobs their seniority and qualifications merit.³⁴

An award of back pay is generally determined by calculating the salary, wages and other compensation which would have been received by the plaintiff had there been no discrimination and the salary, wages and other compensation actually received, if any.³⁵Although back pay is a monetary remedy, the Fourth Circuit has held that back pay is clearly an equitable remedy and thus the award and amount are equitable questions for the judge.³⁶Like most circuits, the Fourth Circuit has held that an award of prejudgment interest on a back pay award is appropriate, although the decision is entrusted to the discretion of the district court.³⁷

Back pay awards begin to accrue on the date of the adverse employment action.³⁸Although there may be factual circumstances in a case which limit a back pay award or which terminate its accrual earlier, the back pay period generally ends on the date judgment is rendered.³⁹ Under Title VII, "[b]ack pay liability shall not accrue from a date more than two years prior to the...