Found liable for discrimination? You’ll owe back pay, even if fired worker starts a new business

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in Best-Practices Leadership,Discrimination and Harassment,Human Resources,Leaders & Managers

When employees lose their jobs because of alleged discrimination, the Pennsylvania Human Relations Commission (PHRC) can award them lost wages based on the difference between their past earnings and what they currently make as self-employed individuals, the Commonwealth Court has ruled.

They’re not required to go out and find comparable jobs, and their former employers may end up subsidizing their entrepreneurship for a while.

The case: Aida Armani worked as a color stylist for a small hair salon. After she complained about sexual harassment, the salon fired her. Instead of looking for another job, she started her own salon and filed a claim with the PHRC.

After hearings, the PHRC concluded that Armani had been sexually harassed and said it was reasonable for her to start her own business rather than look for work. It calculated lost wages based on her previous earnings and what she took out as salary from the young business.

The salon appealed, but the Pennsylvania Commonwealth Court upheld the PHRC’s decision. It did, however, ask the commission to take a closer look at her earnings from the new business, not just the amount she took out as salary. (Raya and Haig Hair Salon v. Pennsylvania Human Relations Commission, No. 327 C.D. 2006, Pennsylvania Commonwealth Court, 2007)  

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