How to calculate how much an employment discrimination case is worth

Bachman Law; Eric Bachman; calculate damages; employment discrimination lawyer

A common question employment lawyers get from their clients in an employment discrimination case is: if I win, how much will my case be worth?

While no “one size fits all” answer exists, it is possible to specifically identify the types of damages that are available and to spell out how the amount will be determined. For purposes of this article, it is assumed that the employee defeated the employer’s motion for summary judgment and won their employment discrimination trial before a jury, judge, or arbitrator.

The Types And Amounts Of Damages Available In Employment Discrimination Cases

Some variation exists in terms of what damages are available depending on what type of employment discrimination claim is at issue. Most employment discrimination cases arise under some combination of Title VII of the 1964 Civil Rights Act, the Age Discrimination in Employment Act (ADEA), the Equal Pay Act (EPA), 42 U.S.C. § 1981 (Section 1981), and the Americans with Disabilities Act (ADA). The most common forms of damages are described below, but note that not all laws allow for the same type or amount of damages so it is important to carefully review the statute that applies to a specific claim.

Lost Pay Damages (Back Pay And Front Pay)

A plain English explanation of lost pay damages is that it compensates an employee for the money and fringe benefits they would have earned had their employer not discriminated against them. For example, if they proved their company discriminatorily denied them a promotion, the employee would generally be entitled to damages for the difference in pay (salary, bonuses, stock options, etc.) between the higher level job they sought and the job they were stuck in. 

Bachman Law; Eric Bachman; employment discrimination lawyerBack pay claims also arise in other types of cases, including discriminatory termination cases (the amount of money an employee would have earned if they had not been fired), as well as hiring discrimination (the amount the employee would have made if they had been hired).

In addition, back pay may also encompass damages beyond salary, including bonuses, vacation leave, healthcare costs, and pension payments. The employer may assert certain legal defenses, which may reduce the amount of lost pay awarded.

Importantly, while statutory caps on the amount of damages exists for certain types of employment discrimination damages, discussed below, these caps do not apply to lost pay damages. Also, all of the laws listed above permit an employee to recover lost pay damages if they prove employment discrimination occurred.

To illustrate how much lost pay may be awarded in an employment discrimination case, considered a scenario where a company discriminatorily denied an employee a promotion that would have paid $350,000/year. But the employee made only $225,000/year in their current job, meaning that they would be awarded $125,000 in back pay damages.

Compensatory And Emotional Distress Damages

Many laws that prohibit employment discrimination, such as Title VII of the 1964 Civil Rights Act and the Americans with Disabilities Act (ADA), permit employees to recover money damages for the emotional pain and suffering caused by their employer’s discrimination against them. 42 U.S.C. § 1981a(a)(1).

Although the name is self-explanatory, emotional distress damages can cover a range of harms, including:

  1. diagnosed psychiatric condition (such as depression or anxiety disorder);
  2. sleeplessness;
  3. loss of enjoyment of life and mental anguish;
  4. reputational harm; and
  5. strained relationships with family and friends

To receive emotional distress damages an employee must show that the employer’s discrimination–rather than some other life event–caused the emotional harm. Some other issues to consider:

  • certain laws do not allow an employee to recover emotional distress damages, including the Age Discrimination in Employment Act (ADEA).
  • Likewise, Title VII and the Americans with Disabilities Act (ADA) cap the amount that an employee can receive for compensatory (and punitive) damages at $300,000. 42 U.S.C. § 1981a(b)(3).
  • For cases involving race discrimination, however, an employee may proceed under 42 U.S.C. § 1981 (Section 1981) and/or certain state laws, which do not have any statutory caps on the amount of damages an employee can receive

Factors that influence the amount of emotional distress damages that may be awarded to an employee include whether: a diagnosed condition exists (such as depression); the employee sought professional counseling services; and if an expert witness testifies at trial regarding the employee’s emotional distress. In general, the more of these elements that exist in an employee’s case, the higher the emotional distress damage award will be.

Punitive Damages

Punitive damages are an award of money that is designed to punish the employer for particularly appalling discrimination. Under Title VII, punitive damages are appropriate if the employer intentionally discriminates against an employee “with malice or reckless indifference to the federally protected rights of an aggrieved individual.” 42 U.S.C. § 1981a(b)(1).

Like emotional distress damages, the maximum amount of punitive damages that can be awarded to an employee under Title VII and the ADA is $300,000. But in a race discrimination case under Section 1981 and certain state laws, no such cap exists.

In employment cases that have no cap on punitive damages, such as Section 1981, courts do not rely on a rigid formula to determine what a constitutionally-appropriate amount of punitive damages should be. Bryant v. Jeffrey Sand Co., 919 F.3d 520, 528 (8th Cir. 2019). As a practical matter, however, courts do often compare the punitive damage award to the compensatory damages award. And if the punitive damages are more than 10 times greater than the compensatory damages, a court may decide to reduce the punitive damages award. See, e.g., State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003).

Note also that punitive damages are not available in a disparate impact discrimination case, which is where an employee argues that an otherwise neutral employment policy has an adverse impact on a protected group of employees. Nor are punitive damages available in an employment discrimination case against the federal government or state/local governments. 42 U.S.C. § 1981a(b)(1).

ADEA lawyer; age discrimination lawyer; Bachman Law; Eric BachmanFinally, the ADEA does not permit punitive or compensatory damages but does authorize liquidated damages in cases where the employee proves that the employer engaged in “willful” age discrimination. 29 U.S.C. § 626(b). These liquidated damages essentially result in doubling the lost pay award (so if the employee had $50,000 in lost pay, they would received $100,000 in a “willful” age discrimination case).


Attorneys’ Fees And Costs

If an employee wins their employment discrimination case, then the employer may also have to pay the employee’s reasonable attorneys’ fees and costs. 42 U.S.C. § 2000e-5(k). Attorneys’ fee awards in employment discrimination cases can range from a few thousand dollars to well over seven figures. To determine the proper amount of attorneys’ fees within this range, courts look to a variety of factors, including:

  • calculating the “lodestar,” which is the number of hours worked multiplied by the applicable hourly rate;
  • whether any considerations should increase or decrease the lodestar; for example, superior results in the outcome of the case and/or the degree of the employee’s success at trial;
  • however, courts should be careful not to decrease the lodestar solely because the case resulted in relatively low damages as this kind of proportionality rule would make it hard for employees with meritorious cases albeit with small potential damages to vindicate their rights in court. See City of Riverside v. Rivera, 477 U.S. 561, 576-78 (1986).

Key Takeaways

Not all employment discrimination laws provide the same type or amount of damages to employees so it is important to understand what damages are available under the specific statute applicable in a particular case. Likewise:

  • Most employment discrimination laws allow an employee to recover lost pay damages and no statutory cap/limit exists on this amount;
  • Under Title VII, the ADA, and certain other laws, the maximum amount of emotional distress and punitive damages that an employee can recover is $300,000;
  • Note, however, that certain laws like Section 1981 and related state laws do not limit the amount that can be awarded for emotional distress and punitive damages; and
  • Punitive damages may be awarded where the employee proves that the discrimination was accompanied by the employer’s “malice or reckless indifference” to the employee’s civil rights

If you have experienced employment discrimination or whistleblower retaliation, call a top rated employment attorney at (202) 769-1681, or start your preliminary consultation online.

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