In an employment discrimination case, when is an Idaho employer liable for punitive damages?

By Joseph G. Ballstaedt

Under federal law, when an employer intentionally discriminates against an employee based on the person’s race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, or disability, the employer can be liable for punitive damages. See 42 U.S.C. § 1981a(a). The purpose of punitive damages is to punish the employer and deter future discrimination. Punitive damages are separate from monetary relief based on lost wages and also distinct from compensatory damages, which address emotional distress, pain and suffering, harm to reputation, etc.

An employee can obtain punitive damages if he or she proves the employer discriminated “with malice or with reckless indifference” to the employee’s federal employment rights. 42 U.S.C. § 1981a(b)(1). Under this standard, it is not enough that the employer knows he is discriminating; rather, the employer must know that he may be violating the employee’s legal rights. See Kolstad v. ADA, 527 U.S. 526, 535 (1999). Put simply, this standard asks whether the employer knew certain conduct was against the law but did it anyway.

Even if discrimination occurs, an employer can usually escape punitive damages by showing good-faith efforts to comply with laws prohibiting discrimination, such as educating employees about discrimination, instituting a zero-tolerance policy, and firing employees who engage in discrimination. See Kolstad, 527 U.S. at 544; Ferguson v. Associated Wholesale Grocers, Inc., 469 F. Supp. 2d 961, 972 (D. Kan. 2007). However, if an employer has an antidiscrimination policy but fails to take good-faith action to implement and enforce it, the employer may not be insulated from punitive damages. See EEOC v. Mgmt. Hosp. of Racine, Inc., 666 F.3d 422, 438 (7th Cir. 2012).

Punitive damages are rarely awarded. It is hard to prove the employer acted with malice and reckless indifference, and most employers settle cases outside of court to avoid punitive damages. However, when awarded, punitive damages can be quite devastating. Punitive and compensatory damages combined can be up to $50,000 for employers with 15 to 100 employees, $100,000 for employers with 101 to 200 employees, $200,000 for employers with 201 to 500 employees, and $300,000 for employers with more than 500 employees. 42 U.S.C. § 1981a(b)(3). Also, punitive damages are only available against private employers, not against federal, state, or local government entities. 42 U.S.C. § 1981a(b)(1).

If you are an Idaho employer or employee who has questions about punitive damages in discrimination cases or any other employment and labor law questions, contact one of our employment and labor lawyers at Racine Olson. We can help solve your problem.

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