How to avoid discrimination suits - compliance with Civil Rights Act of 1991

Nation's Business, March, 1992 by Mary McElveen

The courts must still resolve major questions on how the Civil Rights Act of 1991 will apply in specific job-discrimination cases. But one thing is clear: Company owners and managers must be more careful than ever in hiring, firing, and promoting employees.

"The chance that your company's discrimination policy will be tested in 1992 has increased significantly as a result of the new law," says Mark A. de Bernardo, managing partner for the Washington, D.C., office of Littler, Mendelson, Fastiff & Tichy, the country's largest labor-law firm. "And you can be sure that all the recent publicity about job discrimination and sexual harassment has not been lost on plaintiff's attorneys."

Signed by President Bush Nov. 21, the Civil Rights Act of 1991 extends the right to a jury trial and punitive and expanded compensatory damages to victims of intentional job discrimination.

It expands remedies available to victims by amending Title VII of the Civil Rights Act of 1964, which outlawed employment discrimination based on race, color, religion, sex, and national origin; the Americans with Disabilities Act of 1990, which extended employment protections to the disabled; and other laws.

One of the most important issues yet to be resolved by the court is whether the expanded rights will apply in discrimination cases pending when the law was enacted.

On Dec. 30, the U.S. Equal Employment Opportunity Commission--the nation's chief civil-rights enforcement agency--announced that the statute would not apply retroactively, but that decision has already been challenged.

Aside from such unresolved issues, the new law clearly gives disgruntled workers significant new incentives to sue their employers over discrimination claims.

"The right to a jury trial alone is a big incentive," says Nancy Fulco, human-resources attorney for the U.S. Chamber of Commerce.

A disgruntled employee has a much better chance of winning a case heard by a jury than a judge, Fulco says, because members of a jury would more likely be swayed by a plaintiff's appeals for sympathy than would a judge experienced in hearing such cases.

The potential to receive greater damage awards is another strong incentive for employees to sue.

Previously, under Title VII and the disabilities law, if an employee won a job-discrimination case related to sex, religion, national origin, or disability, the worker could recover only lost wages, interest, and the cost of the litigation.

The individual would also be entitled to job reinstatement if he or she had been fired or to a promotion if discrimination had been found in the denial of a promotion.

Now a jury may award compensatory damages for "future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses," plus punitive damages.

Punitive damages previously were available only to victims of racial or ethnic discrimination under a law that prohibited those types of discrimination in making and enforcing contracts.

The level at which punitive damages are available under the new law is based on the number of employees of the company sued. Congress set caps on these damages at $50,000 for firms with 15 to 100 employees; $100,000 for 101 to 200 employees; $200,000 for 102 to 500; and $300,000 for firms with more than 500 workers.

However, warns Zachary D. Fasman, a partner in the Washington, D.C., office of Paul, Hastings, Janofsky & Walker, a company might be liable, for example, for three times the capped amount if the company is found guilty of three types of discrimination. In addition, the maximum punitive damages are available to each plaintiff in a case, so if five employees bring suit and win, each of the five would be eligible for the maximum damages allowed.

The Civil Rights Act of 1991 does not apply to firms with fewer than 15 employees. But, says Fulco, "If you want to do what's right and be competitive in attracting workers and customers, you should strive to comply nonetheless."

Most labor lawyers and business groups view the limits on damages as temporary at best. Bills have already been introduced in Congress to raise the limits in some cases and remove them in others. Should any of these bills pass, employees' incentives to sue will be even greater.

While the new law has increased the likelihood of job-discrimination suits, there are some basic tips that companies can follow to comply with the law and protect themselves against frivolous complaints.

"The bottom line is that you should be intolerant of discrimination and make that known throughout your company," says de Bernardo. "Take any possible infraction seriously." The seriousness with which you address a complaint can help discourage frivolous suits, he says.

Fasman suggests that employers demonstrate even greater concern now for "doing what is morally right as well as what is legally correct" in hiring, firing, and promoting workers. "Good employee relations is of heightened importance where employees have more of an incentive to sue," he says.