Wednesday, June 12, 2019

Well, at least compensatory and punitive damages are capped in discrimination cases, right? Not so fast, Pennsylvania employers!

What's the worst case scenario in a discrimination claim? In terms of liability, federal discrimination claims under the ADA and Title VII have a statutory cap for compensatory damages (like emotional distress) and punitive damages combined. See, 42 USC s1981a.

It depends on the size of the employer:
  • <101 employees: $50,000
  • 101 - 200 employees: $100,000
  • 201-500 employees: $200,000
  • >500 employees: $300,000
In Pennsylvania (and I suspect other jurisdictions as well), plaintiffs can get around that cap by allocating damages to a state discrimination statute.
Not official use.

The PHRA does not allow for punitive damages. Hoy v. Angelone, 720 A.2d 745, 749 (Pa. 1998) But, it allows for unlimited emotional distress damages. Let's say a jury verdict in a sex discrimination case includes:
  • $2 million in emotional distress; and 
  • $300,000 in punitive damages.
The employer has more than 500 employees. Now, the employer hopes that the $2.3 million gets knocked down to $300,000 (the statutory cap), right! What a relief that would be!

Not so fast! The Court could allocate the emotional
distress to the PHRA claim, and the punitive damages to the Title VII claim. The result would be $2 million for emotional distress under the PHRA, and $300,000 (the statutory cap) in punitive damages under Title VII. Instead of a $300,000 total, the employer is still getting hit with the full $2.3 million total! 

This plaintiff-friendly allocation method received the express approval of the Third Circuit Court of Appeals in Gagliardo v. Connaught Labs., 311 F.3d 565 (3d Cir. 2002). Suddenly, that cap is not quite as useful as many employers think it is.  

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