Punitive damages based on staff size at time of discrimination

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in Discrimination and Harassment,Employment Law,Human Resources

These days, juries aren’t shy about awarding former employees big bucks in employment discrimination cases.

In addition to actual damages (such as lost wages and payment for mental pain and suffering), they can order punitive damages. Those are designed to punish employers and serve as an example for other employers that may not be doing enough to prevent or remedy employment discrimination.

What’s worse for employers, juries like large numbers. They sometimes award punitive damages 10 times larger than the underlying award.

Fortunately, Title VII of the Civil Rights Act caps how much employers have to pay for everything except back wages. The limits on punitive damages depend on how many employees the company has.

Now a federal court has clarified a fine point—the employee number that counts is how many employees the company had in the year the discrimination took place.

Recent case: A jury awarded Roberta Pulse $75,000 in damages in her employment lawsuit against a former employer. Tonya House received $100,000. The jury then added $1 million in punitive damages for Pulse and $2 million for House.

Because Title VII sets limits based on the number of employees during the “current or preceding calendar year” figures, the court had to decide whether that meant the year in which the jury made its decision or the year in which the discrimination took place.

The court concluded the relevant count was the number of employees at the time the discriminatory act occurred. Because there were more than 100 but fewer than 200 employees during the relevant year, damages for each woman were capped at $100,000. (Pulse, House v. Larry Miller Group, No. 03-CV-2073, DC CO, 2008)

Final note: Title VII caps punitive damages according to this formula:

  • More than 14 and fewer than 101 employees = $50,000
  • More than 100 and fewer than 201 employees = $100,000
  • More than 200 and fewer than 501 employees = $200,000
  • More than 500 employees = $300,000

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