Even employees who suffer no harm can collect top dollar — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Even employees who suffer no harm can collect top dollar

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Here’s yet another reason to clean up the workplace and make certain it’s free of harassment, graffiti and other evidence of a hostile work environment: Employees can collect hundreds of thousands of dollars in punitive damages even if they weren’t physically or financially harmed by the hostile workplace.

For cases brought under Title VII of the Civil Rights Act, each employee can collect up to $300,000 in total damages, including punitive damages. The key word there: each.

Recent case: Eight black employees sued the Kansas City Southern Railroad Company for maintaining a racially hostile work environment. They claimed to have found a wire noose hanging near a workshop and racist graffiti on workshop walls. They also said they had to listen to racially derogatory comments and threats.

A jury found the employees had indeed worked in a racially hostile environment and awarded each one $175,000 in punitive damages. They got nothing for pain and suffering, lost wages or other tangible damages. Punitive damages are payments intended to punish a wrongdoer rather than compensate a victim for real losses. The railroad appealed, arguing that the law doesn’t allow for punitive damages unless the victim also suffered actual losses.

But the 5th Circuit Court of Appeals disagreed. It said that since total awards are capped at no more than $300,000, there’s a natural limit. Plus, the court said allowing punitive damages gives employers an incentive to wipe out egregious workplace behavior. (Abner, et al., v. The Kansas City Southern Railroad Company, No. 06-30476, 5th Cir., 2008)

Final note: Attorneys who represent employees are sure to take note of this case and file more lawsuits. And because the cap is no more than $300,000 per employee (based on the number of employees the company has). it will pay to sign up as many employees from one employer as possible. After all, suing on behalf of 10 employees could net $3 million in damages.

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