Punitive Damages under Title VII

Title VII of the Civil Rights Act of 1964 provides a legal remedy for employees or applicants who are discriminated against by the employers because of the employees' sex, race, color, religion, or national origin. Employees or applicants who suffer adverse employment actions like being fired, turned down for a job, or demoted for one of these reasons may seek to recover front pay, back pay, reinstatement to or placement in a position, or attorney fees. They may also, in certain cases, seek to recover punitive damages. Punitive damages, unlike standard compensatory damages, are not designed to restore a plaintiff to the position he or she was in prior to the alleged wrongful conduct. Instead, punitive damages are designed to punish the offender for particularly bad conduct.

Availability of Punitive Damages

Punitive damages first became available under Title VII through the 1991 amendments to the Act, known as the Civil Rights Act of 1991. Under the Amendment, punitive damages may be awarded against a nongovernmental employer that "engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual."

Conduct Necessary to Support Award of Punitive Damages

Initially, federal courts interpreted this provision to mean that an employee or applicant had to show that the employer had acted "egregiously" before he or she would be entitled to punitive damages. The United States Supreme Court, however, has held that proving "malice" or "reckless indifference" does not require a showing of egregiousness. Instead, an employee or applicant must show that (1) the employer was aware of the employee's rights under Title VII, and (2) the employer wilfully chose to disregard the fact that the employer's conduct violated these rights. Under this standard, punitive damages are not available unless the employer's conduct was intentional. They are also not available where the employer believes that its conduct was lawful. For example, in a religious discrimination case, the employer may believe that its conduct was supported by a bona fide occupational qualification defense.

Although a plaintiff is not required to prove egregious behavior in order to prevail on a claim for punitive damages under Title VII, proof of egregious behavior will often signal a bad intent. Thus, proof of egregious may be used to infer the required "evil motive."

Agency Principles and Punitive Damages

Because employers typically act through their employees or agents, the evil intent necessary to support an award of punitive damages is often evidenced only through the actions of an employer's agents. Employers may be liable for these actions, but only if the following requirements are met:

1. the employer authorized the action, or
2. the agent was unfit and the employer was reckless in employing him, or
3. the agent was a manager and was acting in the scope of his or her employment, or
4. the employer or a manager approved the action after it occurred.

Cap on Punitive Damages

The 1991 Amendment provides a cap on punitive damages that may be awarded. The cap, based upon a sliding scale, is dependent upon the number of employees that an employer has. For employers with 100 or fewer employers, no more than $50,000 in punitive damages may be awarded. For employers with more than 500 employees, the cap is $300,000.

Because this statutory cap limits damages that may be awarded to each "complaining party," employers facing class actions, which are sometimes filed on behalf of millions of "complaining parties," are in danger of huge punitive damages judgments.

Copyright 2008 LexisNexis, a division of Reed Elsevier Inc.