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Allowing Harassment Just Got More Expensive

As a result of the recent U.S. Supreme Court decision in Pollard v. duPont, employees who win harassment and discrimination lawsuits may seek unlimited front-pay damages from employers. Before Pollard, some courts upheld a cap on front-pay awards.

Front pay represents earnings an employee would likely receive in the future if the harassment or discrimination had not occurred. The award covers the period from the date of a lawsuits final verdict (or settlement) to the date of an employee's reinstatement. Or the court may award front pay in lieu of reinstatement if an employee doesn't want to be reinstated (perhaps because of extreme hostility between the parties), or if reinstatement isn't possible (perhaps because the employees position has been filled). Depending on facts and circumstances -- such as an employees advanced age, the level or uniqueness of the position, and the job market -- front pay can extend to the point of re-employment or to a lifetime of diminished earnings.

Caps on Damages

The Civil Rights Act of 1991 capped compensatory and punitive damages that a jury could award to plaintiffs for discrimination. Under the act, compensatory damages include future monetary losses, pain, suffering, mental anguish and inconvenience. The act excluded back pay -- earnings lost between the date of the discriminatory acts and the court verdict or settlement -- from the list of compensatory damages, so it wasn't capped. The problem was that the act didn't mention front pay.

Some appellate courts held that front pay wasn't included in future monetary losses, and others held that it was and thus qualified as compensatory damages subject to the cap. The U.S. Supreme Court settled the question in Pollard.

The Facts Of the Case

A female employee at a duPont chemical plant was the only female on her shift. She alleged her co-workers subjected her to egregious sexual harassment for six years. After she took medical leave, she refused to return to what she claimed was a hostile work environment. The company discharged her and she filed suit.

The trial court held that she "was slowly drowning in an environment that was completely unacceptable while her employer sat by and watched." The court awarded her about $107,000 in back pay and benefits, $253,000 in attorneys' fees, and $300,000 in compensatory damages. She argued that she was entitled to an additional $800,000 in front pay, but the court held that front pay was included in her compensatory damages that had already exceeded the cap.

The 6th U.S. Circuit Court of Appeals affirmed, holding that front pay was subject to the compensatory-damages cap.

The Supreme Court Rules

Civil liberties and workers rights advocates argued, in friend-of-the-court filings, that the statutory cap was not only arbitrary and unfair but also minimized the deterrent for businesses to discriminate. The business community, rallying to duPonts side, pointed out that front-pay awards were often arbitrary, speculative and out of proportion to actual losses.

The Supreme Court held unanimously that because front pay -- like back pay -- isn't a component of compensatory damages, it isn't subject to the statutory dollar limit on compensatory damages.

Harassment Is Costly

The possibility of a significant front-pay award represents a strong incentive for employers to prevent job bias. We would be glad to help you establish policies and procedures to help prevent discriminatory acts.

Limit Your Exposure

To avoid unlimited front-pay damages in discrimination lawsuits, adopt a risk-management program that includes these steps:

• Establish antidiscrimination policies and procedures.
• Publish your policies and procedures in your employee handbook.
• Hold seminars to explain the policies to all employees.
• Train supervisors to recognize and prevent discrimination and harassment.
• Document every instance of alleged workplace discrimination and harassment.
• Discipline transgressors consistently and firmly.

Your attorney can help ensure that your risk-management program is effective.