Large corporate accountability is a welcome change.
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When it comes to enforcing federal anti-discrimination laws on employment, the United States’ Equal Opportunities Commission (EEOC) is primarily responsible. Much of this enforcement is done administratively through the acceptance and investigation of employee complaints. The EEOC also works with workers and employers to facilitate agreements to settle their disputes.
When no agreement can be reached, it usually happens that the EEOC notifies the employee of a lawsuit. This gives the individual the right to sue the employer himself. But on rare occasions, the EEOC will sue the employer in federal court on behalf of the employee.
Why the EEOC sometimes sues employers
The likelihood that the EEOC will sue an employer for alleged workplace discrimination is very low. However, this does not mean that the EEOC considers many of the complaints it receives to be unfounded. While odds of winning play a key role in the EEOC’s decision to bring a lawsuit, other important considerations play a role in the EEOC’s decision to initiate a lawsuit. Some of these factors include:
- The existence of a legal issue that the EEOC wishes to resolve through the court.
- The impact of the lawsuit on reducing discrimination in the workplace.
- The availability of the EEOC’s litigation resources.
One possible motivation for the EEOC to take legal action arises from the desire to send employers a message about the discrimination occurring in their workplaces. This could very well explain the EEOC’s recent major victory over Walmart on allegations of discrimination against a disabled worker.
EEOC v. Walmart
According to court records, Marlo Spaeth (Spaeth) began working for Walmart as a part-time salesperson in 1999. Spaeth was born with Down syndrome and had difficulty adjusting to changes in her routine, had learning difficulties, and could not drive.
When Spaeth started working for Walmart, she was only able to work certain afternoon hours and only certain days of the week. One of the reasons for this unique schedule was that Spaeth could take the bus to and from work.
Most of Spaeth’s work at Walmart started her shift at 12 p.m. and ended at 4 p.m. She often had to leave a shift at least 10 minutes early and most of the time these early departures were either approved by a manager or not counted against her.
However, as of April 2013, Walmart updated its planning guidelines, which placed more emphasis on employee presence and punctuality. Then in November 2014, Walmart changed its planning process to better accommodate the increase in customer traffic at certain times of the day.
Walmart also implemented a new automated scheduling system that changed Spaeth’s shift from 1:00 p.m. to 5:30 p.m. Spaeth had no problems arriving on time for the start of the shift. But she often left an hour or two before the end of her shift. Spaeth explained that she wanted her old schedule back from noon to 4pm so she could catch the bus and get home on time for dinner.
After Walmart continued to struggle to work with Spaeth on their planning needs, Walmart fired Spaeth in July 2015 for excessive absenteeism. Walmart also refused to reinstate Spaeth, claiming that Spaeth, or anyone else asking on their behalf, never received a reasonable accommodation request.
In January 2016, Spaeth filed a discrimination charge with the EEOC alleging that Walmart violated the Americans with Disabilities Act of 1990 (ADA) by disciplining her, refusing to take account of her disability, firing her, and dismissing her decided not to hire her again. Ultimately, the EEOC filed a lawsuit on behalf of Spaeth in January 2017.
In the lawsuit, the EEOC demanded the reinstatement of Spaeth as well as back payments, damages and punitive damages. After a four-day trial, it took the jury just three hours to conclude that Walmart had violated the ADA.
The jury awarded Spaeth $ 150,000 in damages (for emotional pain and distress) and $ 125 million in punitive damages. However, due to legal caps on recoverable damages under the ADA, this amount should be reduced to just $ 300,000.
Due to the size of the original verdict, this case made some headlines. But it reminded us of two important facts about many labor law cases.
First, when juries find an injustice in the workplace, they will often do everything they can to correct it. Second, damage caps can dramatically affect the amount of cash reimbursement available to a claimant.
Runaway juries are not common
In the vast majority of cases, the juries will try to reach a verdict that, in their opinion, is fair to all parties. It may appear that, in some cases, a jury was unreasonable in their judgment in attempting to give a plaintiff a big payday or windfall. But this perception is usually wrong because there are several critical facts that are not known to the public and that would explain the jury’s judgment. A perfect example of this is the now famous McDonald’s hot coffee lawsuit.
All Spaeth wanted was to bring her schedule back into line with what she’d had for over a decade. Walmart is one of the most successful companies in the history of human civilization and is not a foreign logistics coordinator. But it refused to change their schedule by a single hour.
A massive jury verdict in a civil case is almost never about making a plaintiff rich. Rather, it is about punishing a defendant’s clear misconduct.
The jury in Spaeth’s case concluded that Spaeth had an ADA recognized disability that warranted reasonable accommodation from Walmart. The judges were likely upset by the fact that Walmart could easily have given Spaeth the desired schedule, but made a conscious decision against it. It wouldn’t be surprising to learn that the judges were just as keen to send a message to Walmart as the EEOC.
Damage caps
Many federal anti-discrimination laws set caps on the monetary damage a plaintiff can reclaim in a successful labor proceeding. For example, under the ADA, compensation and punitive damages may not have specific limits based on the size of the employer:
- 15 to 100 employees: $ 50,000
- 101 to 200 employees: $ 100,000
- 201 to 500 employees: $ 200,000
- 501 and more employees: $ 300,000
Because Walmart has more than 500 employees, they are capped at $ 300,000. This upper limit does not apply to arrears, prepayments or consequential damages. But unfortunately for Spaeth the jury did not award her any of these damages.
Even if these legal caps weren’t in place, the $ 125 million punitive damages verdict would not survive an appeal. Because there are constitutional limits on how high punitive damages may be in relation to damages.
There are no clear rules for the limits of punitive damages. But if there is no extreme situation, the ratio between punitive damages and claims for damages must not exceed 9: 1.
When the ratio of punitive damages to damages reaches 10: 1, it is almost guaranteed that a court will conclude that the punitive damages violate the defendant’s constitutional rights. And in a typical civil lawsuit, courts are unlikely to accept punitive damages in excess of four times the damages (4: 1 ratio).
If you look at Spaeth’s case, the highest punitive damages, which could theoretically be $ 1.35 million, is $ 1.35 million. And most likely, a court would limit it to $ 600,000 ($ 150,000 x 4).
In summary
If a jury awards a multi-million dollar verdict in favor of the plaintiff in a labor dispute, it is likely because the jury believed that the employer did something outrageous or that the employee was otherwise inappropriately treated.
Punitive damages must be in an “appropriate” proportion to the damages awarded. Typically, the ratio between punitive and indemnity damage must not exceed 4: 1. If they exceed 9: 1, punitive damages are almost guaranteed to be reduced by a judge.
While it is unfortunate that there are such caps on the damage victims of discrimination can receive, ultimately it is a nice change for large companies to still be held accountable for such behavior.
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