Show me the money: Damage caps in employment law cases.

Employment law claims are undoubtedly the most difficult claims to bring forward. This is especially true if you are an employee in a conservative state like Texas. All other considerations aside, the financial and emotional cost of litigation alone is taxing. To make matters worse, the chances of success at trial in an employment law case is relatively low.

In 2019, The Harvard Law & Policy Review published a paper that found that from 1979 to 2006, plaintiffs won employment discrimination cases 15% of the time in federal court. Compare that to plaintiffs in all other civil suits who won their cases 51% of the time. The low margin of success for plaintiffs asserting employment discrimination claims can be attributed to many factors, including employer friendly laws, conservative judges and juries, and short deadlines.

On top of all of that, there’s yet another challenge plaintiffs asserting employment discrimination claims must face: limits on recoverable damages. 

Some plaintiffs sue their employers solely based on principal. They feel they have been wronged, desire to share their story with the world, and simply seek justice. Most plaintiffs, however, don’t sue their employer just for fun. Rather, they are seeking a monetary award to compensate for the loss they’ve suffered as a result of the employer’s illegal action. In most employment cases, an employee can potentially recover the following damages.

The most important category of damages an employee is entitled to in employment cases is back wages (sometimes known as lost wages). Back wages is the money the employee lost as a result of the employer’s illegal action. For example, Triden Bump worked for MartWal as a cashier and made $5,000 per month. MartWal terminated Triden Bump because he’s old and slow on the cash register. After his termination, Triden Bump was out of work for 3 months. He finally found a job at SVC making $5,000 per month. If Triden Bump sued MartWal for discrimination, he would be entitled to $15,000 in back wages, which represents the pay he lost during the three months he was out of work. 

Another category of damages in employment cases is front pay. Front pay is different than back wages because it is intended to replace back wages after the plaintiff wins his or her case through the time he or she finds a new job with comparable work and pay. For instance, assume Triden Bump could not find work for an entire year after being terminated from MartWal. Triden Bump sued MartWal for discrimination and won at trial. Following trial, it took Triden Bump another four months to find a job at SVC making $5,000 per month. Based on that scenario, Triden Bump would be entitled to one year’s worth of back wages and four months of front pay. 

One of the most well known types of damages in employment law cases is emotional pain and suffering (known as compensatory damages). You probably hear about this category of damages on TV shows and movies all the time. This category of damages refers to the psychological trauma endured by an employee as a result of the employer’s illegal action. As you might expect, the more disturbing the conduct by the employer the more damages an employee may recover for emotional distress. 

A fourth category of damages in employment cases is consequential damages. These damages are designed to compensate the employee for financial harm that occurs as a result of the employer’s actions. Consequential damages include things like relocation costs, damage to credit history and out-of-pocket medical or therapy bills. 

Then you have punitive damages, which is a category of damages that exists to punish an employer for really bad behavior. Punitive damages are usually only awarded when an employer acts maliciously or recklessly. Some employment anti-discrimination laws may only allow punitive damages in the form of liquidated damages. In those instances, liquidated damages double the overall damage award in situations where punitive damages would otherwise be warranted. 

Finally, there are non-monetary damages. This category of damages includes things like reinstatement to the employee’s last held position with an employer or the court ordering an employer to grant the promotion the employee was illegally denied. In circumstances where an employee’s return to work for the employer isn’t feasible, it could include things like a positive or neutral reference or outplacement service.

Notably, how much damages a successful plaintiff can recover does only depend on the strength of the case or the severity of the discrimination, but also the size of the employer with respect to the number of its employees. By way of example, in discrimination claims brought under Title VII of the Civil Rights Act of 1964, plaintiffs are subject to compensatory damage caps based on the number of employees employed by the employer:

  • • 15 to 100 employees: $50,000
  • • 101 to 200 employees: $100,000
  • • 201 to 500 employees: $200,000
  • • 501 and more employees: $300,000

Under the Family Medical Leave Act (“FMLA”), emotional distress and punitive damages are not available for recovery. Instead, the employee may be eligible to recover liquidated damages. 

Damage caps are important because they can reduce any damage award an employee may recover in a lawsuit. Assume MalWart retained more than 500 employees. MalWart discriminated again Triden Bump and fired him. Triden Bump sued MalWart for discrimination under Title VII of the Civil Rights Act of 1964. The jury awarded Triden Bump $2 million dollars. Under the Title VII damage caps, the maximum award Triden Bump could recover is $300,000 plus back wages for the year he was out of work. So, the judge reduces Triden Bumps $2 million dollars award to $360,000. That is the reality of employment cases.

Employment cases are the most difficult types of cases to win. Aside from conservative laws, judges, and juries, a plaintiff’s ability to obtain compensation for employment violations is diminished by damage caps.  If you have been discriminated against in the workplace and believe you are entitled to damages from your employer, contact my office for a consultation. 

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