Prior to 1991, only equitable relief, primarily back pay, was available to prevailing plaintiffs in Title VII discrimination cases. In 1991, Congress amended Title VII and the Americans with Disabilities Act to allow for additional remedies, including punitive damages in cases of “intentional discrimination.” The amendment provides that to be entitled to punitive damages, the complaining party must demonstrate that the respondent engaged in a discriminatory practice “with malice or with reckless indifference to the federally protected rights of an aggrieved individual.” 42 U.S.C. &#sect; 1981a(b)(1).
Previously, federal courts attempting to apply this definition to punitive damages have differed over whether a claimant must show egregious misconduct before a jury is permitted to consider a request for punitive damages. In Kolstad v. American Dental Association, the Supreme Court resolved the issue.
The case involved Kolstad's claim that she was denied a promotion because of intentional discrimination in violation of Title VII and the Americans with Disabilities Act. Kolstad characterized the selection procedure for the position as a sham and produced evidence that the decision-maker told sexually offensive jokes and referred to certain prominent professional women in derogatory terms. At trial, the court refused Kolstad's request that the jury be instructed to consider awarding punitive damages. On appeal, the Court of Appeals for the District of Columbia reversed the lower court's decision refusing to provide a punitive damages instruction. In a rehearing en banc, the entire court concluded that before the question of punitive damages can go to a jury, evidence must be shown that an employer engaged in some “egregious” misconduct.
The Supreme Court concluded that egregious misconduct – the standard enunciated by the Court of Appeals – is not necessary for an award of punitive damages under Title VII. To be sure, the Court observed, egregious or outrageous acts may serve as evidence supporting an inference of the requisite “evil motive,” but egregious is not the same as the 1991 amendment's requirement of “malice” or “reckless indifference.” Focusing on the language in the 1991 amendments, the Court observed that the use of the words “malice” and “reckless indifference” relate to the employer's knowledge that it may be acting in violation of federal law. For example, the employer may be unaware of the relevant federal prohibition, or it may be a case in which the employer discriminates with the belief that its discrimination is lawful. In such cases, the Court intimated punitive damages would not be available.
Notwithstanding the above, even if the requisite malice or reckless indifference is demonstrated, in order to justify the award of punitive damages, the Court found that there must be some basis for imputing liability to the employer. Accordingly, the Court announced the following rule: an employer will not be liable for punitive damages for the discriminatory employment decisions of its managers where those decisions are contrary to the employer's good faith efforts to comply with Title VII. Giving such punitive damages protection to employers who make good faith efforts to prevent discrimination, the Court observed, accomplishes Title VII's objective of motivating employers to detect and deter discrimination.
This decision creates a powerful incentive for employers not only to develop policies prohibiting discrimination, but to monitor compliance with those policies in the workplace.
Previously, federal courts attempting to apply this definition to punitive damages have differed over whether a claimant must show egregious misconduct before a jury is permitted to consider a request for punitive damages. In Kolstad v. American Dental Association, the Supreme Court resolved the issue.
The case involved Kolstad's claim that she was denied a promotion because of intentional discrimination in violation of Title VII and the Americans with Disabilities Act. Kolstad characterized the selection procedure for the position as a sham and produced evidence that the decision-maker told sexually offensive jokes and referred to certain prominent professional women in derogatory terms. At trial, the court refused Kolstad's request that the jury be instructed to consider awarding punitive damages. On appeal, the Court of Appeals for the District of Columbia reversed the lower court's decision refusing to provide a punitive damages instruction. In a rehearing en banc, the entire court concluded that before the question of punitive damages can go to a jury, evidence must be shown that an employer engaged in some “egregious” misconduct.
The Supreme Court concluded that egregious misconduct – the standard enunciated by the Court of Appeals – is not necessary for an award of punitive damages under Title VII. To be sure, the Court observed, egregious or outrageous acts may serve as evidence supporting an inference of the requisite “evil motive,” but egregious is not the same as the 1991 amendment's requirement of “malice” or “reckless indifference.” Focusing on the language in the 1991 amendments, the Court observed that the use of the words “malice” and “reckless indifference” relate to the employer's knowledge that it may be acting in violation of federal law. For example, the employer may be unaware of the relevant federal prohibition, or it may be a case in which the employer discriminates with the belief that its discrimination is lawful. In such cases, the Court intimated punitive damages would not be available.
Notwithstanding the above, even if the requisite malice or reckless indifference is demonstrated, in order to justify the award of punitive damages, the Court found that there must be some basis for imputing liability to the employer. Accordingly, the Court announced the following rule: an employer will not be liable for punitive damages for the discriminatory employment decisions of its managers where those decisions are contrary to the employer's good faith efforts to comply with Title VII. Giving such punitive damages protection to employers who make good faith efforts to prevent discrimination, the Court observed, accomplishes Title VII's objective of motivating employers to detect and deter discrimination.
This decision creates a powerful incentive for employers not only to develop policies prohibiting discrimination, but to monitor compliance with those policies in the workplace.