Front Pay Uncapped: A New Risk

Author:Ms Mary Ann Oakley
Profession:Holland & Knight LLP
 
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The United States Supreme Court recently made employment litigation

potentially much more expensive for employers. In a unanimous decision, the

Court held that "front pay" is not covered by the damages cap in Title

VII and Americans with Disabilities Act (ADA) cases.

The damages cap was a part of the 1991 Civil Rights Act, which, for the first

time, gave parties the right to a jury trial in Title VII and ADA cases. The

maximum amount of compensatory and punitive damages that may be imposed ranges

from $50,000 for the smallest employers to $300,000 for employers with more than

500 employees. If front pay were included in the cap, as the employer argued,

the potential financial liability in Title VII and ADA cases would be limited to

back pay and benefits lost, an amount of damages within the cap, and attorney

fees. Now, front pay must be added as well.

Front pay is an amount to compensate for pay lost between the date of the

judgment and reinstatement, or an amount in lieu of reinstatement which can run

for months or years into the future. If the court, for example, orders an

employee reinstated and there is no suitable position open, front pay can cover

the period from the judgment until there is an opening. Most common is the

situation where there are hard feelings or other reasons why reinstatement would

not work; front pay is awarded as a substitute.

The Supreme Court did not consider when front pay is an appropriate remedy,

leaving that question for another day. However, there are considerations

available for employers, especially when the employee is no longer working for

the defendant employer. It is settled law that a former employee who turns down

an unconditional offer of reinstatement cannot be awarded any pay after the date

of the rejected offer. In appropriate situations, such an unconditional offer of

reinstatement can cut off both front pay and a portion of back pay liability.

If the employee fulfills his or her obligation to mitigate damages and

obtains another job, the liability for...

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