Front Pay Awards in Discrimination Cases Are Not Limited by Title VII's Monetary Cap: Supreme Court
In an unanimous decision, the U.S. Supreme Court has ruled that an individual subjected to an unlawful hostile work environment is entitled to recover unlimited "front pay" damages for "lost" future earnings under Title VII of the Civil Rights Act of 1964. Where reinstatement is not feasible and front pay is ordered by the trial court, the statutory cap on the amount of compensatory and punitive damages an individual may recover as a result of a violation of Title VII rights does not apply to front pay, the Court determined. Pollard v. E. I. du Pont de Nemours & Co., 532 U.S. ___ (2001).
The plaintiff sued her employer for sexual harassment resulting from a hostile work environment, claiming she was subjected to repeated insults, sabotage and shunning by co-workers. Although she had complained to management, the harassment continued until the plaintiff took a medical leave of absence to seek treatment for psychological injuries. She eventually was terminated for refusing to return to work in the same department.
At a trial before a Tennessee federal district court, the plaintiff was awarded back pay and benefits of over $107,000, attorney's fees of over $250,000, and $300,000 in compensatory damages, the maximum amount allowable under the statutory cap. The district court stated that the award of compensatory damages was "insufficient to compensate plaintiff." However, bound by a ruling of the U. S. Court of Appeals for the Sixth Circuit that defined front pay as an element of compensatory damages, the trial court applied the $300,000 limit. Since the Sixth Circuit was the only federal appeals court to subject front pay awards to the statutory damages cap, the Supreme Court agreed to resolve the conflict.
Ruling unanimously, the Court concluded that the award of front pay was not subject to the statutory cap (which increases, up to $300,000, as the size of the employer's work force increases). In so ruling, the Supreme Court held that the Title VII remedy of front pay is akin to that of back pay because it makes the worker whole for lost wages. As such, it should not be treated as an element of compensatory or punitive damages and limited by the statutory cap.
Employment law experts note this decision clarifies but does not change the current state of employment law in most jurisdictions. However, from a practical standpoint, it focuses attention on how plaintiffs structure requests for remedies. Where reinstatement or continued employment is not an option, the potential for front pay damages can be significant. One of the ways employers can limit the risk is by having viable and effective outplacement strategies that provide meaningful assistance when former employees are making the transition from one workplace to another.