Enforcement Guidance: Compensatory and Punitive Damages Available under sec 102 of the CRA of 1991

1.   SUBJECT: Enforcement Guidance: Compensatory and Punitive
     Damages Available under § 102 of the Civil Rights Act
     of 1991.

2.   PURPOSE: This enforcement guidance sets forth the
     Commission's position on the availability of compensatory
     and punitive damages pursuant to the Civil Rights Act of
     1991, § 102, "Damages in Cases of Intentional
     Discrimination."

3.   EFFECTIVE DATE: July 14, 1992.

4.   EXPIRATION DATE: As an exception to EEOC Order 205.001,
     Appendix B, Attachment 4, § a(5), this Notice will
     remain in effect until rescinded or superseded.

5.   ORIGINATOR: Title VII/EPA Division, Office of Legal Counsel.

6.   INSTRUCTIONS: File at end of Compliance Manual with other
     Policy or Enforcement Guidance.

7.   SUBJECT MATTER:

     This enforcement guidance sets forth the Commission's
position on how to assess compensatory and punitive damages under
§ 102 of the Civil Rights Act of 1991, 105 Stat 1071, Pub.
L. No. 102-166 (hereinafter referred to as § 1981A).1

I.     RIGHT TO RECOVERY

     Section 1981A(a)(1) provides that a complaining party2 may
recover compensatory and punitive damages against a respondent3
who has engaged in unlawful intentional discrimination in
violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e et seq., unless that complaining party can recover
under 42 U.S.C. § 1981. Only race discrimination claims can
be brought under § 1981.4

     Damages are available in addition to any relief authorized
under § 706(g) of Title VII.5 Therefore, § 1981A does
not affect the right to backpay, frontpay, or any type of relief
already recoverable under Title VII. Damages are authorized only
in cases of intentional discrimination and are therefore not
available where the charge alleges that neutral employment
practices have an adverse impact. Section 1981A(a)(1).

     As indicated above, § 1981A(a) provides for damages
under Title VII, if the complaining party "cannot recover" under
§ 1981. For purposes of the Commission's administrative
enforcement process, the question arises as to the precise
meaning of the "cannot recover" language. The Commission has no
jurisdiction over § 1981, nor will the Commission, during
the investigation and conciliation process, be able to determine
the scope or outcome of a § 1981 action brought by the
charging party. Thus, in processing charges, the Commission will
seek compensatory and punitive damages, as appropriate, whether
or not an individual may have a cause of action under §
1981.

     This interpretation is supported by the Sponsors'
Interpretative Memorandum, 137 Cong. Rec. S15,484 (daily ed. Oct.
30, 1991), which explains that the purpose of the "cannot
recover" language was "to assure that a complaining party does
not obtain duplicative damage awards against a single respondent
under both section 1981 and section 1981A ... [and that] the
complaining party need not prove that he or she does not have a
cause of action under section 1981 in order to recover damages in
the section 1981A action." In addition, the Interpretative
Memorandum of Representative Edwards, co-sponsor of HR-1 (House
Bill) and Chairman of the Subcommittee on Civil and
Constitutional Rights of the House Judiciary Committee which was
responsible for HR-1, asserts that "if a party has a potential
cause of action under Section [1981], but for whatever reason
does not bring it, that party 'cannot recover under section
[1981]'...," and hence can recover under § 1981A. "No party
is under any obligation to proceed under one or the other statute
or to waive any cause of action under either statute as a
condition of proceeding." 137 Cong. Rec. H9527 (daily ed. Nov. 7,
1991).

     Therefore, at least, for purposes of charge processing, the
Commission will seek damages where otherwise appropriate, even if
the complaining party has an ongoing § 1981 court action, as
long as the complaining party has not recovered under §
1981. Because the Commission has no enforcement authority under
§ 1981, its decisions concerning appropriate relief cannot
rest on contingencies that may, or may not, occur under §
1981. Any other interpretation would prevent the Commission from
being able to settle race discrimination claims, to the equal
detriment of complaining parties and respondents.

     Section 1981A(a)(2) provides the same remedies for
intentional violations of the federal employee provisions of the
Rehabilitation Act of 1973, 29 U.S.C. § 791, and Title I of
the Americans with Disabilities Act of 1990, 42 U.S.C. §
12101 et seq. However, damages are not available in disability
discrimination cases which involve reasonable accommodation if
the respondent "demonstrates good faith efforts, in consultation
with the person with a disability," to provide a reasonable
accommodation. Section 1981A(a)(3). For example, assume that a
respondent consulted with a sight impaired applicant to determine
whether any reasonable accommodations exist to enable the
applicant to perform this particular job. The applicant informs
the respondent that a scanner would reasonably accommodate him.
The scanner is very expensive and the respondent believes that a
magnifier, backed up by the office secretary as a part-time
reader, would reasonably accommodate the applicant. The applicant
subsequently files a charge and the Commission concludes that,
under the particular circumstances of that job, the magnifier
plus part-time reader was not an effective reasonable
accommodation. Thus, the Commission concludes that the respondent
failed to provide a reasonable accommodation and is therefore
liable for discrimination. While the respondent will be liable
for backpay and instatement, as appropriate, the Commission will
not seek compensatory or punitive damages in this case because
the respondent consulted with the complaining party and had a
good faith belief that it had provided a reasonable
accommodation.

     Finally, damages may not be available in certain cases where
the employer acted with both legitimate and unlawful motives
(mixed motives). Section 107(b) (to be codified at §
706(g)(2)(B) of Title VII). See EEOC Enforcement Guidance No.
N915.002, "Recent Developments in Disparate Treatment Theory,"
July 14, 1992, for a full discussion of this issue.

II.     TYPES AND EXTENT OF RECOVERY

     Section 1981A(b) sets limitations on certain damages that
complaining parties may recover. First, it specifies that
punitive damages are available only if the complaining party
demonstrates that the respondent engaged in discrimination "with
malice or reckless indifference to the federally protected rights
of an aggrieved individual." It also provides that punitive
damages are not available against a governmental entity or
political subdivision.

     Second, § 1981A(b) reiterates that compensatory damages
do not include any relief authorized under § 706(g) of Title
VII. Third, it provides a limitation on the sum of punitive
damages and compensatory damages for "future pecuniary losses,
emotional pain, suffering, inconvenience, mental anguish, loss of
enjoyment of life, and other nonpecuniary losses." The limitation
on the amount of damages (caps) is based on the size (number of
employees)6 of the respondent. The limitations are stated as
follows:

     15 to 100 employees                     :     $50,000
     101 to 200 employees                    :     $100,000
     201 to 500 employees                    :     $200,000
     501 employees or more                   :     $300,000

The limitations do not, on their face, apply to respondents who
have fewer than fifteen employees, although labor organizations
and employment agencies with fewer than fifteen employees may be
subject to Title VII.7 Thus, a literal interpretation of the
provision would potentially subject them to unlimited damages.
Such an interpretation would be inconsistent with Congress' clear
intent to spare small respondents from large damage awards. The
provision could also be read to mean that labor organizations and
employment agencies with fewer than fifteen employees are not
subject to any damages. The Commission rejects both
interpretations and concludes that all covered employment
agencies and labor organizations with 100 or fewer employees are
subject to the $50,000 cap on damages.

     When the Commission, or an individual, is pursuing a claim
on behalf of more than one person, the damage caps are to be
applied to each aggrieved individual. For example, where the
Commission files suit on behalf of ten complaining parties,
against an employer who has 1000 employees, each complaining
party may receive (to the extent appropriate) up to $300,000. The
respondent's total liability for all ten complaining parties may
be up to $3,000,000.8

     Because relief recoverable under § 706(g) is not deemed
to be compensatory damages, complaining parties may recover full
compensation for back pay, interest on backpay, frontpay, or any
relief that would have been available under Title VII, § 505
of the Rehabilitation Act, or the ADA, without inclusion in the
caps. Although some may contend that frontpay is a "future
pecuniary loss" to be included in the caps, the Commission
disagrees. Frontpay is a type of "relief authorized under Title
VII" and, therefore, is excluded from the definition of
compensatory damages and is not included in the caps.9

     Past pecuniary losses are also not included in the caps and
are fully compensable where actual out-of-pocket losses can be
shown. Section 1981A(b)(3) limits only claims that typically do
not lend themselves to precise quantification, i.e., punitive
damages, future pecuniary losses, and nonpecuniary losses.

        Example: Complaining Party is subjected to brutal racial
        harassment and is subsequently demoted. As a result, she
        suffers from severe depression. She spends $20,000 in
        psychiatric and medical bills for treatment of the
        depression. Her psychiatrist also testifies that CP will
        require approximately two additional years of therapy. CP
        may receive $20,000 for the medical bills and full
        backpay and frontpay awards, all of which are fully
        compensable and not included in the caps. She may also
        receive damages for the depression (nonpecuniary loss),
        damages for future psychiatric bills for the next two
        years (future pecuniary losses), and punitive damages.
        The respondent has 35 employees. The sum of the damages
        for the depression, future psychiatric expenses, and
        punitive damages cannot exceed the statutory cap of
        $50,000.

     A.     Compensatory Damages

     Compensatory damages are awarded to compensate a complaining
party for losses or suffering inflicted due to the discriminatory
act or conduct. See Carey v. Piphus 435 U.S. 247, 254 (1978)
(purpose of damages is to "compensate persons for injuries caused
by the deprivation of constitutional rights"). Compensatory
damages "may be had for any proximate consequences which can be
established with requisite certainty." 22 Am Jur 2d Damages
§ 45 (1965)" Compensatory damages include damages for past
pecuniary loss (out-of-pocket loss), future pecuniary loss, and
nonpecuniary loss (emotional harm). Compensatory damages are
allowed against federal, state, and local governments and private
sector employers.

     The following section sets forth the legal parameters for
computing compensatory and punitive damages where appropriate.

          1.     Pecuniary Losses

     Pecuniary losses include, for example, moving expenses, job
search expenses, medical expenses,10 psychiatric expenses,
physical therapy expenses, and other quantifiable out-of-pocket
expenses that are incurred as a result of the discriminatory
conduct. To recover damages, the complaining party must prove
that the employer's discriminatory act or conduct was the cause
of his loss. The critical question is whether the complaining
party incurred the pecuniary losses as a result of the employer's
discriminatory action or conduct.

     Section 1981A distinguishes past and future pecuniary
losses, in that future pecuniary losses are subject to the caps,
while past pecuniary losses are not. The Commission concludes
that past pecuniary losses are out-of-pocket losses that occurred
prior to the date of the resolution of the damage claim, i.e.,
conciliation, settlement, or the conclusion of litigation. The
amount to be awarded for past pecuniary losses can be determined
by receipts, records, bills, cancelled checks, confirmation by
other individuals, or other proof of actual losses and expenses.
Damages for past pecuniary losses will not normally be sought
without documentation.

     Future pecuniary losses are out-of-pocket expenses that are
likely to occur after conciliation, settlement, or the conclusion
of litigation.11 As noted previously, future pecuniary losses are
subject to the caps and do not include frontpay. Future pecuniary
losses include the same expenses listed above, if these losses
will continue after settlement, conciliation or litigation.

     The complaining party has a duty to mitigate his/her
damages. A complaining party may not recover damages for any harm
that (s)he could have avoided or minimized with reasonable
effort. See Restatement (Second) of Torts, § 918(1).12
However, the respondent has the burden of showing that the
complaining party failed to exercise reasonable diligence to
mitigate his/her damages. Cf., e.g., Weaver v. Casa Gallardo,
Inc., 922 F.2d 1515, 1527, 55 EPD Par. 40,540 (11th Cir. 1991)
(employer has the burden of showing that the plaintiff failed to
make reasonable efforts to find work to mitigate his damages when
seeking backpay); Fleming v. County of Kane, State of Ill., 898
F.2d 553, 560 (7th Cir. 1990) (the burden is on the employer to
prove, as an affirmative defense, that the employee failed to
mitigate damages when seeking lost wages); Woolridge v. Marlene
Industries Corp., 875 F.2d 540, 548, 53 EPD Par. 39,772 (6th Cir.
1989) (defendant has the burden of producing sufficient evidence
to establish the amount of interim earnings or lack of diligence
in mitigating damages on the part of the plaintiff). Therefore,
if the respondent can prove that the complaining party failed to
exercise reasonable diligence to mitigate his/her damages and
could have avoided or minimized such damages with reasonable
effort, the damages may be reduced accordingly.

        Example: Complaining Party is a nurse in New York City,
        which has a critical nursing shortage. CP was fired when
        she rejected the sexual advances of the hospital
        administrator. CP has been unemployed for over a year.
        She seeks recovery for past pecuniary losses, which
        include, among other losses, moving expenses to
        California and job search expenses in California. CP
        maintains that it was necessary to move to California to
        find another nursing position. The respondent proves that
        CP could have found a comparable nursing position in New
        York City with reasonable diligence within a matter of
        weeks and that her New York job search expenses would
        have been minimal. Therefore, CP's recovery of damages
        for her moving expenses and job search expenses in
        California may be limited to the amount of the job search
        expenses she would have incurred in New York City.
        Backpay and damages sought for the other pecuniary losses
        incurred during her year-long unemployment may also be
        reduced, since the respondent has proved that she could
        have found another job within a few weeks.

          2.     Nonpecuniary Losses

     Damages are available for the intangible injuries of
emotional harm such as emotional pain, suffering, inconvenience,
mental anguish, and loss of enjoyment of life. Other nonpecuniary
losses could include injury to professional standing, injury to
character and reputation, injury to credit standing, loss of
health, and any other nonpecuniary losses that are incurred as a
result of the discriminatory conduct. Nonpecuniary losses for
emotional harm are more difficult to prove than pecuniary
losses.13 Emotional harm will not be presumed simply because the
complaining party is a victim of discrimination.14 The existence,
nature, and severity of emotional harm must be proved. Emotional
harm may manifest itself, for example, as sleeplessness, anxiety,
stress, depression, marital strain, humiliation, emotional
distress, loss of self esteem, excessive fatigue, or a nervous
breakdown. Physical manifestations of emotional harm may consist
of ulcers, gastrointestinal disorders, hair loss, or headaches.

     An award for emotional harm is warranted only if there is
sufficient causal connection between the respondent's illegal
actions and the complaining party's injury. See Gore v. Turner,
563 F.2d 159, 164 (5th Cir. 1977). The discriminatory act or
conduct must be the cause of the emotional harm. The claim of
emotional harm will be seriously undermined if the onset of
symptoms of emotional harm preceded the discrimination. However,
if a complaining party had preexisting emotional difficulties and
his mental health deteriorates as a result of the discriminatory
conduct, the additional harm may be attributed to the respondent. 
The fact that the complaining party may be unusually emotionally
sensitive and incur great emotional harm from discriminatory
conduct will not absolve the respondent from responsibility for
the greater emotional harm. Williamson v. Handy Button Machine
Company, 817 F.2d 1290, 1294, 43 EPD Par. 37,178 (7th Cir. 1987)
("perhaps [plaintiff] was unusually sensitive, but a tortfeasor
takes its victims as it finds them"). For example, suppose the
Commission finds that the respondent is liable for sexual
harassment against three female employees, one of whom is an
incest victim. The incest victim incurred much greater emotional
harm from the sexual harassment than did her two co-workers. The
respondent is liable for the greater emotional harm that the
incest victim suffered.

     For charges alleging emotional harm, consider factors that
are directly relevant to whether and to what extent the employer
caused the employee's emotional harm. For example, in Cowan v.
Prudential Insurance Co., 852 F.2d 688, 690-91, 47 EPD Par.
38,167 (2d Cir. 1988), the court found that defendant's failure
to promote the plaintiff caused him severe emotional distress,
humiliation, loss of self esteem, marital problems, and heavy
drinking. However, the court considered several factors to
determine whether and to what extent the emotional harm was
caused by the defendant or by other factors. The factors
considered were that: 1) the plaintiff had not been subjected to
overt racism or public humiliation; 2) upper management was not
aware that race was a factor in the failure to promote the
plaintiff, who had been offered three other less attractive
positions; 3) the plaintiff had caused some of the humiliation
and difficulties that he had with his co-workers because he told
clients that he would be promoted and he criticized his
co-workers in a newspaper article; and 4) the plaintiff had not
sought counseling. The court found that these factors justified a
lower amount than the plaintiff sought. In Vance v. Southern Bell
Telephone and Telegraph Company, 863 F.2d 1503, 1516, 48 EPD Par.
38,626 (11th Cir. 1989), the court found that an award of
$500,000 in compensatory damages for mental distress, emotional
harm, or humiliation resulting from racial discrimination was
properly ruled excessive where there were other factors which
probably contributed to the plaintiff's mental distress. The
plaintiff had marital problems because her husband was named in a
paternity suit by another woman, financial problems, problems
resulting from an automobile accident, dietary problems, and
family illnesses and deaths. Therefore, where a complaining
party's emotional harm is due in part to personal difficulties,
which were not caused or exacerbated by the discriminatory
conduct, the employer is liable only for the harm resulting from
the discriminatory conduct.

     The Commission will typically require medical evidence of
emotional harm to seek damages for such harm in conciliation
negotiations. However, evidence of emotional harm may be
established by testimony. Gunby v. Pennsylvania Electric Company,
840 F.2d 1108, 1121-22, 45 EPD Par. 37,785 (3d Cir. 1988), cert.
denied, 492 U.S. 905, 50 EPD Par. 39,201 (1989); Cowan v.
Prudential Insurance Co., 852 F.2d at 690-91. The "plaintiff's
own testimony may be solely sufficient to establish humiliation
or mental distress." Williams v. TransWorld Airlines, Inc., 660
F.2d 1267, 1273, 27 EPD Par. 32,174 (8th Cir. 1981). For example,
a plaintiff was awarded $52,644.80 in damages for mental anguish
and emotional distress resulting from losing his house and car,
marital harmony, and the respect of his children, after he was
discriminatorily discharged. Muldrew v. Anheuser-Busch, Inc., 728
F.2d 989, 33 EPD Par. 34,187 (8th Cir. 1984). In Block v. R.H.
Macy & Co., Inc., 712 F.2d 1241, 1245, 32 EPD Par. 33,730 (8th
Cir. 1983), the plaintiff was awarded $12,402 for "mental
anguish, humiliation, embarrassment and stress," $7,598 in
backpay, and $60,000 in punitive damages. The evidence presented
was that the supervisor openly manifested racial bias against
Blacks by making racially offensive references to the plaintiff,
another employee, and customers. On one occasion, the supervisor
and plaintiff got into a dispute during which the supervisor
berated the plaintiff in street language in front of coworkers
and customers, although she never addressed White employees in
this manner. The supervisor reported the dispute to management
and told them that she wanted plaintiff "out of there."
Management discharged the plaintiff without asking for her
version of the incident, although they were well aware of the
supervisor's racial bias. The plaintiff testified that she "cried
and felt angry" with her supervisor after her discharge.
Plaintiff further testified that she was unemployed for thirteen
months and because of her financial dilemma, she suffered
sleeplessness, anxiety, embarrassment, and depression. The jury
found this evidence sufficient to award damages for mental
distress.

     Similarly, in Stallworth v. Shuler, 777 F.2d 1431, 38 EPD
Par. 35,806 (11th Cir. 1985), a case brought under § 1983
and § 1981, the court affirmed an award for $100,000 for
humiliation and emotional distress. Over a period of years, the
plaintiff was consistently passed over for administrative
positions and principalships for racial reasons, while less
qualified White persons were promoted. As a result, plaintiff
suffered emotional stress, loss of sleep, marital strain, and
humiliation. The defendant stated that there was no evidence that
plaintiff missed work, received professional help, or slipped in
his relationships with students or co-workers. Plaintiff
countered that he was careful not to give the respondent a reason
not to promote him. The court found that plaintiff's evidence was
sufficient to award damages. However, for conciliation or
settlement purposes, testimony solely by the complaining party
may not be sufficient to establish emotional harm. There should
be corroborating testimony by the complaining party's co-workers,
supervisors, family, friends, or anyone else with knowledge of
the emotional harm.

     Damage awards for emotional harm vary significantly and
there are no definitive rules governing the amounts to be
awarded. However, compensatory damage awards must be limited to
the sums necessary to compensate the plaintiff for actual harm,
even if the harm is intangible. Carter v. Duncan-Huggins, Ltd,
727 F.2d 1225, 33 EPD Par. 34,187 (D.C. Cir. 1984). In Williamson
v. Handy Button Machine Company, 817 F.2d at 1293-95, the court
upheld a damage award of $10,000 for the psychological disability
of a nervous breakdown after the following sequence of events.
Plaintiff was discriminated against for over a decade. She was
assigned unskilled work, although she was qualified for, and
occasionally performed, skilled work. Plaintiff was passed over
for numerous promotions, in favor of less qualified White
employees with less seniority. Plaintiff was also demoted to a
lower status department despite her protests and the seniority
rule in the collective bargaining agreement. Finally, on one
occasion, the plaintiff used an upstairs bathroom, where she had
been assigned a locker by the company, and was loudly berated in
scatological terms by a supervisor for using this particular
bathroom. The psychiatrist characterized the bathroom incident as
the straw that broke the camel's back. The plaintiff was never
able to return to work. In addition to the award for emotional
harm, plaintiff received $130,000 for backpay and frontpay,
$10,000 for medical and psychological expenses, and $100,000 for
punitive damages.

     In comparison, in another case brought under § 1981,
the plaintiff received $123,000 for emotional distress. The
plaintiff had been under stress continuously for fear of making a
mistake on the job, because he was discriminatorily denied proper
training which he needed for adequate performance. The
plaintiff's White coworkers, both senior and junior to the
plaintiff, regularly received formal training. He was denied pay
raises equivalent to those of his White co-workers because of his
poor evaluations, which stressed the need for training. When the
plaintiff finally received training after numerous requests, it
was superficial in nature. Plaintiff's stressful situation
resulted in high absenteeism and he was placed on probation. He
filed a complaint and was subsequently discharged. Plaintiff's
psychiatrist testified that the plaintiff was suffering from
anxiety, stress, and depression. The court found that this was an
adequate basis for the award. Plaintiff also received $176,000 in
backpay, and $300,000 in punitive damages. Rowlett v.
Anheuser-Busch, 832 F.2d 194, 44 EPD Par. 37,428 (1st Cir. 1987).

     The method for computing nonpecuniary damages during
conciliation or settlement should typically be based on a
consideration of the severity of harm and the time that the
complaining party has suffered from the emotional harm.15 To
determine the severity of the harm consider, for example, whether
the harm consisted of occasional sleeplessness, or a nervous
breakdown resulting in years of psychotherapy. The length of time
that the complaining party has suffered from the emotional harm
is also relevant. Of course, a complaining party who has suffered
from severe depression for two months will be awarded less money
than a complaining party who has suffered from severe depression
for a year. However, different methods of computing damage
amounts for emotional harm may be appropriate in certain cases.
Since medical evidence is important, a medical release should be
obtained from the complaining party whenever emotional or
physical harm is alleged.

     B.     Punitive Damages

     Punitive damages are awarded to punish the respondent and to
deter future discriminatory conduct. They are not available
against a federal, state, or local government, a government
agency, or a political subdivision. Punitive damages are
available only where the respondent acted with "malice or with
reckless indifference to the federally protected rights of an
aggrieved individual." Section 1981A(b)(1).

     This standard is consistent with § 1981 and therefore
should be interpreted consistently.16 The standard for awarding
punitive damages under § 1981 is whether the defendant acted
with malice, an evil motive, or recklessness or callous
indifference to a federally protected right. Stephens v. South
Atlantic Canners, Inc., 848 F.2d 484, 489, 46 EPD Par. 38,032
(4th Cir. 1988), cert. denied, 488 U.S. 996 (1988). Additionally,
under § 1983, plaintiffs may recover punitive damages when
"the defendant's conduct is shown to be motivated by evil motive
or intent, or when it involves reckless or callous indifference
to the federally protected rights of others." Smith v. Wade, 461
U.S. 30, 56 (1983); Garza v. City of Omaha, 814 F.2d 553, 556, 43
EPD Par. 37,072 (8th Cir. 1987) (punitive damages under §
1983 "may be awarded where the defendant exhibits oppression,
malice, gross negligence, willful or wanton misconduct, or
reckless disregard for the civil rights of the plaintiff").

          1.     Determining Malice or Reckless Disregard

     A "finding of liability does not of itself entitle a
plaintiff to an award of punitive damages." Yarbrough v. Tower
Oldsmobile, 789 F.2d 508, 514, 40 EPD Par. 36,216 (7th Cir.
1986). However, conscious, purposeful discrimination may be
sufficient to warrant punitive damages.17 As the First Circuit
has observed, "can it really be disputed that intentionally
discriminating against a [B]lack man on the basis of his skin
color is worthy of some outrage?" Rowlett v. Anheuser-Busch, 832
F.2d 194, 206, 44 EPD Par. 37,428 (1st Cir. 1987). In Brown v.
Freedman Baking Company, 810 F.2d 6, 42 EPD Par. 36,779 (1st Cir.
1987), punitive damages were warranted for three Black
plaintiffs, after two plaintiffs were fired because a manager
believed that it "just doesn't look good" for too many Blacks to
work in the main store. The third plaintiff complained and was
told that when too many Blacks get together "they get arrogant."
He was fired when he provided a statement to the EEOC on the
other plaintiffs' behalf. The court stated that it "would not be
unreasonable for the jury to view such conduct as outrageous and
deserving of substantial punitive damages." Id. at 11.

     A number of factors may be considered to determine whether
conduct was committed with malice or reckless indifference to the
complaining party's federally protected rights. This evidence is
likely to have already been obtained during the liability phase
of the investigation. The list is nonexclusive and other relevant
factors may also be considered.

     1.  The degree of egregiousness and nature of the
respondent's conduct should be considered. See Restatement
(Second) of Torts, § 908(2). In EEOC v. Gaddis, 733 F.2d
1373, 1380, 34 EPD Par. 34,348 (10th Cir. 1984), the court held
that allowance of punitive damages "involves an evaluation of the
nature of the conduct in question." The respondent had made an
employment offer to the plaintiff, an out-of-state resident,
based upon a recommendation by another employee. Plaintiff
accepted the position and his name was posted on an assignment
board as a new employee. The respondent met the plaintiff for the
first time when he reported for work. The respondent was visibly
upset when he discovered that the plaintiff was Black and stated
that a Black person would never be allowed to work in the office.
The plaintiff worked for several days and was fired. The
respondent stated that no vacancy existed, although it
subsequently hired two White males for the position. The court
determined that this conduct warranted punitive damages.

     Conduct which is shocking or offends the conscience is
egregious and warrants punitive damages. For example, CP's
supervisor often asks CP for dates and sometimes makes sexual
remarks to her, although CP has repeatedly asked him to leave her
alone. The supervisor finally tells CP, who is the most qualified
person for an upcoming promotion, that if she wants the promotion
she must have sex with him. The supervisor's conduct may be
considered "shocking."

     2.  The nature, extent, and severity of the harm to the
complaining party should be considered. The Restatement (Second)
of Torts, § 908(2); Keenan v. City of Philadelphia, 55 FEP
Cases 932, 943 (E.D. Pa. 1991).

     3.  The duration of the discriminatory conduct is relevant.
For instance, an extended period of discriminatory conduct
"suggests an official policy of discrimination as opposed to the
work of a renegade supervisor." Williamson v. Handy Button
Machine Company, 817 F.2d at 1296. Evidence that the respondent
tolerated or condoned the discriminatory conduct over a period of
time could constitute malice and/or reckless indifference.

     4.  The existence and frequency of similar past
discriminatory conduct by the respondent should be considered.
For example, if there is a continuing pattern of harassment by
the respondent, it may be sufficient to find malice or reckless
indifference.

     5.  Evidence that the respondent planned and/or attempted to
conceal or cover-up the discriminatory practices or conduct is
relevant.

     6.  The employer's actions after it was informed of
discrimination should be considered. An employer who has notice
of discriminatory conduct and fails to take action could incur
punitive damages. See Yarbrough v. Tower Oldsmobile, 789 F.2d at
514-15 (punitive damages warranted.under § 1981 where the
plaintiff testified that his supervisor reprimanded him in
writing, without cause, and transferred him to a less desirable
work area after saying "[w]e don't want no Black guy in the front
of the shop;" the plaintiff brought his complaints of
discrimination to management, who failed to respond and was found
to be "indifferent to his federally protected rights").

     7.  Proof of threats or deliberate retaliatory action
against complaining parties for complaints to management or
filing a charge normally will constitute malice. Hunter v.
Allis-Chalmers, 797 F.2d 1417, 1425, 41 EPD Par. 36,417 (7th Cir.
1986) (punitive damages warranted where the defendant had
deliberately fired a worker for making well-founded complaints
with a state FEP agency about persistent acts of racial
harassment); Erebia v. Chrysler Plastic Products Corp., 772 F.2d
1250, 1260, 37 EPD Par. 35,317 (6th Cir. 1985) (manager's threat
to hurt plaintiff economically for pursuing his complaints of
harassment may constitute malice), cert. denied, 475 U.S. 1015
(1986).

          2.     Calculation of Punitive Damage Amount

     If malice or reckless disregard of the complaining party's
rights is found, respondents may be liable for punitive damages
up to the maximum amount allowed.18 Congressional intent was to
make respondents "liable for the non-wage economic consequences
of [intentional] discrimination up to the full extent of the
stated limitations." Sponsors' Interpretative Memorandum, 137
Cong. Rec. S15,484 (daily ed. Oct. 30, 1991).

     Of course, the punitive damage award should "bear some
relation to the 'character of the defendant's act' along with
'the nature and extent of the harm to the plaintiff that the
defendant caused."' Rowlett v. Anheuser-Busch, 832 F.2d at 207,
quoting, Restatement (Second) of Torts, § 908(2). These
factors are discussed above on pages 15 and 16.

     The financial position of the respondent is also relevant.
City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 270 (1981)
("evidence of a tortfeasor's wealth is traditionally admissible
as a measure of the amount of punitive damages that should be
awarded"); Rowlett v. Anheuser-Busch, 832 F.2d at 207 ("a rich
defendant may well be required to pay more than a poor one who
committed the same wrong"). The award should be considered in the
context of the respondent's monetary resources. The amount of
punitive damages should "sting," but not "destroy" the
respondent. Keenan v. City of Philadelphia, 55 FEP Cases at
944-45. The following factors are relevant in determining a
respondent's financial position. Note, however, that this list is
not exclusive and other relevant factors may also be considered.

          A.     The revenues and liabilities of the business.

          B.     The fair market value of the respondent's
                 assets.

          C.     The amount of liquid assets on hand, which
                 includes amounts that they can reasonably
                 borrow.

          D.     The respondent's propensity to generate income
                 in the future -- projected earnings.

          E.     The resale value of the business. This is
                 particularly useful where the business has a
                 unique spot in the market. For instance, large
                 companies may be seeking to buy the business.

          F.     Consider whether the respondent is affiliated
                 with, or a subsidiary of, a larger entity that
                 could provide additional financial resources to
                 the respondent.

     In Bessier v. Precise Tool & Engineering Co., Inc., 778 F.
Supp. 1509, 57 FEP Cases 1249 (W.D. Mo. 1991), the plaintiff was
granted discovery of defendant's financial records to prepare a
case on the issue of punitive damages. The financial records
included: 1) financial statements; 2) income tax returns; 3)
documents reflecting the defendant's gross income, net income,
and expenditures; 4) bank statements and deposit records; and 5)
general ledgers. The defendant was also compelled to answer
interrogatories as to its net worth. See also Heller v. Ebb Auto
Co., 55 EPD Par. 40,431, 53 FEP Cases 911 (D. Or. 1990)
(Plaintiff may be entitled to defendant's profit and loss
statements and balance statements after making a prima facie
showing of entitlement to punitive damages).

III.     CHARGE RESOLUTION

     Damages are often a necessary component of full relief, to
the extent that unlawful conduct occurred on or after November
21, 1991. EEOC Policy Guidance No. 915.002, "Application of the
Damages Provisions of the Civil Rights Act of 1991 to Pending
Charges and Pre-Act Conduct," December 27, 1991.

     Damages for past pecuniary losses should be routinely
sought. Do not assume emotional harm, or automatically seek
damages for such harm. Typically, the Commission will require
medical evidence of emotional harm to seek damages for such harm
in conciliation negotiations. However, in exceptional cases, the
complaining party may establish emotional harm without medical
documentation, but (s)he should have a reasonable justification
for not seeking medical attention for the emotional harm.

     If malice or reckless disregard of the complaining party's
rights is found, the District Director and the Regional Attorney
should be consulted, who will, in turn, consult with Headquarters
on a case-by-case basis.




______7/14/92____________     _______________-S-_________________
Date                              Evan J. Kemp, Jr. Chairman

1.     Section 102 will be codified at 42 U.S.C. § 1981,
rather than as part of Title VII. The text of § 1981 is
attached as Appendix A.

2.     The term "complaining party" means the Equal Employment
Opportunity Commission, the Attorney General, or a person who may
bring an action or proceeding under Title VII, the Rehabilitation
Act, or the Americans with Disabilities Act. Section 1981A(d)(1).

3.     "The term 'respondent' means an employer, employment
agency, labor organization, joint labor-management committee
controlling apprenticeship or other training or retraining
program, including an on-the-job training program, or Federal
entity subject to section 717." Section 104(n) (to be codified at
§ 701(n) of Title VII).

4.     42 U.S.C. § 1981 provides a cause of action for
individuals who are discriminated against on the basis of race in
the making and enforcing of contracts. The Civil Rights Act of
1991 amends § 1981 to include all forms of racial bias in
employment. Section 101(2)(b) of the Act provides that "the term
'make and enforce contracts' includes the making, performance,
modification, and termination of contracts, and the enjoyment of
all benefits, privileges, terms and conditions of the contractual
relationship." Race includes, to some extent, "ethnicity." See
St. Francis College v. Al-Khazraji, 481 U.S. 604 (1987) (§
1981 prohibits racial discrimination as well as discrimination on
the basis of "ancestry or ethnic characteristics").

5.     Relief under § 706(g) of Title VII has traditionally
been limited to equitable relief. See, e.g., Mitchell v. Seaboard
System Railroad, 883 F.2d 451, 452, 51 EPD Par. 39,254 (6th Cir.
1989) (Title VII plaintiffs are entitled to equitable relief, but
not to compensatory damages). Equitable relief under §
706(g) usually means backpay, reinstatement, and/or frontpay.
Fringe benefits and all forms of compensation are included in
backpay. EEOC "Policy Statement on Remedies and Relief for
Individual Cases of Unlawful Discrimination," February 5, 1985.
Injunctions against future discriminatory conduct by the
respondent may also be imposed.

6.     Part-time employees are included in this count. See EEOC
Policy Guidance No. N-915-052, "Whether part-time employees are
employees within the meaning of § 701(b) of Title VII and
§ 11(b) of the ADEA," April 20, 1990. Two circuits have
concluded that part-time employees are not counted as employees
for jurisdictional purposes. See, e.g., EEOC v. Garden and
Associates, 956 F.2d 842 (8th Cir. 1992) (ADEA)- Zimmerman v.
North American Signal Corp., 794 F.2d 347, 354, 31 EPD Par.
33,486 (7th Cir. 1983) (ADEA). However, the conclusions in these
cases were based on the definitional requirement that employers
have the requisite number of employees "for each working day in
each of twenty or more calendar weeks." Because §
1981A(b)(3) does not contain the "for each working day"
requirement for counting employees to determine a respondent's
cap, the rationale for a Garden or Zimmerman type of result
appears to have been eliminated.

7.     See EEOC Compliance Manual, Volume II, § 605,
Appendix N. This guidance explains that both labor organizations
and employment agencies with fewer than fifteen employees may be
covered by Title VII, if they regularly deal with Title VII
covered employers. Labor organizations need only operate a hiring
hall which procures employees for an employer or have fifteen
members to be covered by Title VII. See 42 U.S.C. §
2000e(e).

     Basing a union's damage caps on its number of employees,
rather than on the number of its members, may have been a
drafting error. However, since § 1981A(b)(3) specifically
refers to the number of "employees," and since that is not
inconsistent with the provision's purpose, the Commission
interprets the statute to mean that the caps relate to the number
of a union's employees, rather than to the number of its members.

8.     Section 1981A(b)(3) provides that the amount of damages
"shall not exceed [the caps] for each complaining party."
Complaining party is defined as "the Equal Employment Opportunity
Commission, the Attorney General, or a person who may bring an
action under [Title VII, the ADA or the Rehabilitation Act]."
Section 1981A(d) (emphasis added), Since each individual who
states a claim under one of these statutes is one who may bring
an action, each is eligible for damages up to the cap. This is
true even when their claims are joined either in Commission or
private litigation brought on behalf of several individuals, or
in a class action brought by a private party.

     As a policy matter, any other construction would conflict
with Congressional intent to make damages available to fully
compensate persons harmed by discrimination and to deter further
discrimination. Moreover, a contrary interpretation would be at
least unwieldy, if not unworkable. If the Commission cannot seek
damages on behalf of each aggrieved person in a single action, it
would have to file numerous individual suits or recommend that
each individual intervene in Commission actions.

9.     The Sponsors' Interpretative Memorandum, 137 Cong. Rec.
S15,484 (daily ed. Oct. 30, 1991), states that "damages cannot
include backpay, the interest thereon, frontpay, or any other
relief authorized under Title VII." (emphasis added). See also
Representative Edwards' Interpretative Memorandum, 137 Cong. Rec.
H9527 (daily ed. Nov. 7, 1991) (frontpay is relief authorized
under Title VII and is excluded from damages). Moreover, courts
generally find that frontpay is an available remedy under Title
VII. See, e.g., Carter v. Sedgwick County, 929 F.2d 1501, 1505,
56 EPD Par. 40,699 (10th Cir. 1991); Weaver v. Casa Gallardo,
Inc., 922 F.2d 1515, 1528, 55 EPD Par. 40,540 (11th Cir. 1991);
Edwards v. Occidental Chemical Corp., 892 F.2d 1442, 1449, 52 EPD
Par. 39,585 (9th Cir. 1990); Pitre v. Western Electric Co. 843
F.2d 1262, 127879, 46 EPD Par. 37,882 (10th Cir. 1988). But see
Fortino v. Quasar Company, 950 F.2d 389, 57 EPD Par. 41,117 (7th
Cir. 1991) (ADEA case questioning frontpay awards under Title VII
because "Title VII authorizes only equitable relief and frontpay
resembles common law damages for breach of employment contract").

10.     Although compensatory damages were not available under
Title VII prior to § 1981A, medical expenses have been
awarded as part of § 706(g) relief in some circumstances.
See, e.g., EEOC v. Service News Co., 898 F.2d 958, 53 EPD Par.
39,736 (4th Cir. 1990) (court awarded unreimbursed medical
expenses, which resulted from plaintiff's loss of health
insurance after she was discriminatorily discharged); Weiss v.
Parker Hannifan Corp., 747 F. Supp. 1118, 1132, 55 EPD Par.
40,531 (D.N.J. 1990) (court awarded unreimbursed medical
expenses, resulting from plaintiff's loss of health insurance, as
part of backpay). In such cases, medical expenses would be
excluded from the caps, either as relief authorized by §
706(g) or as past pecuniary losses.

11.     Congressional intent for including future pecuniary
losses in the caps appears to have been to limit damages on
losses that are typically difficult to quantify. If past
out-of-pocket losses can be shown, they can be recovered without
regard to the limitations on damages. Up to the time of
resolution of the complaint, whether at conciliation, settlement,
or the conclusion of litigation, actual out-of-pocket losses can
be shown with some certainty.

12.     By analogy, § 706(g) of Title VII provides that
interim earnings or amounts earnable with reasonable diligence by
the charging party shall operate to reduce a backpay amount.

13.     Cases awarding compensatory and punitive damages under
other civil rights statutes will be used for guidance in
analyzing the availability of damages under § 1981A. Section
1981 cases are particularly useful because Congress treated the
§ 1981A damage provisions as an amendment to § 1981.

14.     Complaining parties should be informed that if they claim
emotional harm, respondents may be able to obtain records of
medical and/or psychiatric treatments for conditions relevant to
the complained of symptoms. A respondent may also obtain relevant
information concerning the complaining party's private life.

15.     During litigation, the amount of damages will be decided
by a jury if either party requests a jury. Jury trials will be
available if a plaintiff seeks compensatory or punitive damages.
Section 1981A(c).

16.     "Punitive damages are available under [§ 1981A] to
the same extent and under the same standards that they are
available to plaintiffs under 42 U.S.C. § 1981. No higher
standard may be imposed." Representative Edwards' Interpretative
Memorandum, 137 Cong. Rec. H9527 (daily ed. Nov. 7, 1991).

17.     Malice is defined as "a condition of mind which prompts a
person to do a wrongful act willfully, that is, on purpose, to
the injury of another." Black's Law Dictionary 862 (5th ed.
1979). Thus, discriminatory conduct "is maliciously done if
prompted or accompanied by ill will ... either toward the injured
person individually or toward all persons in one or more groups
... of which the injured person is a member." Soderbeck v.
Burnett County, 752 F.2d 285, 289 (7th Cir. 1985), cert. denied,
471 U.S. 1117 (1985).

18.     The sum of punitive damages, future pecuniary losses, and
nonpecuniary losses may not exceed the damage caps set forth in
§ 1981A(b)(3). Therefore, punitive damage awards under
§ 1981A typically will not be "grossly excessive" or
"shocking." See Rowlett v. Anheuser-Busch, 832 F.2d 194, 206, 44
EPD Par. 37,428 (1st Cir. 1987) (punitive damage award of $3
million ruled grossly excessive and reduced to $300,000); Vance
v. Southern Bell Telephone and Telegraph Company, 863 F.2d 1503,
1516, 48 EPD Par. 38,626 (11th Cir. 1989) (punitive damage award
of $2.5 million is "high and rather shocking").


APPENDIX A

     SEC. 102. DAMAGES IN CASES OF INTENTIONAL DISCRIMINATION

     The Revised Statutes are amended by inserting after section
1977 (42 U.S.C. 1981) the following new section:

"SEC. 1977A.     DAMAGES IN CASES OF INTENTIONAL DISCRIMINATION
IN EMPLOYMENT.

"(a) RIGHT OF RECOVERY.-

     "(1) CIVIL RIGHTS.- In an action brought by a complaining
party under section 706 or 717 of the Civil Rights Act of 1964
(42 U.S.C 2000e-5) against a respondent who engaged in unlawful
intentional discrimination (not an employment practice that is
unlawful because of its disparate impact) prohibited under
section 703, 704, or 717 of the Act (42 U.S.C. 2000e-2 or
2000e-3), and provided that the complaining party cannot recover
under section 1977 of the Revised Statutes (42 U.S.C. 1981), the
complaining party may recover compensatory and punitive damages
as allowed in subsection (b), in addition to any relief
authorized by section 706(g) of the Civil Rights Act of 1964,
from the respondent.

     "(2) DISABILITY.- In an action brought by a complaining
party under the powers, remedies, and procedures set forth in
section 706 or 717 of the Civil Rights Act of 1964 (as provided
in section 107(a)), and section 505(a)(1) of the Rehabilitation
Act of 1973 (29 U.S.C. 794a(a)(1)), respectively) against a
respondent who engaged in unlawful intentional discrimination
(not an employment practice that is unlawful because of its
disparate impact) under section 501 of the Rehabilitation Act of
1973 (29 U.S.C. 791) and the regulations implementing section
501, or who violated the requirements of section 501 of the Act
or the regulations implementing section 501 concerning the
provision of a reasonable accommodation, or section 102 of the
Americans with Disabilities Act of 1990 (42 U.S.C. 12112), or
committed a violation of section 102(b)(5) of the Act, against an
individual, the complaining party may recover compensatory and
punitive damages as allowed in subsection (b), in addition to any
relief authorized by section 706(g) of the Civil Rights Act of
1964, from the respondent.

     "(3) REASONABLE ACCOMMODATION AND GOOD FAITH EFFORT.- In
cases where a discriminatory practice involves the provision of a
reasonable accommodation pursuant to section 102(b)(5) of the
Americans with Disabilities Act of 1990 or regulations
implementing section 501 of the Rehabilitation Act of 1973,
damages may not be awarded under this section where the covered
entity demonstrates good faith efforts, in consultation with the
person with the disability who has informed the covered entity
that accommodation is needed, to identify and make a reasonable
accommodation that would provide such individual with an equally
effective opportunity and would not cause an undue hardship on
the operation of the business.

"(b) COMPENSATORY AND PUNITIVE DAMAGES.-

     "(1) DETERMINATION OF PUNITIVE DAMAGES.- A complaining party
may recover punitive damages under this section against a
respondent (other than a government, government agency or
political subdivision) if the complaining party demonstrates that
the respondent engaged in a discriminatory practice or
discriminatory practices with malice or with reckless
indifference to the federally protected rights of an aggrieved
individual.

     "(2) EXCLUSIONS FROM COMPENSATORY DAMAGES.- Compensatory
damages awarded under this section shall not include backpay,
interest on backpay, or any other type of relief authorized under
section 706(g) of the Civil Rights Act of 1964.

     "(3) LIMITATIONS.- The sum of the amount of compensatory
damages awarded under this section for future pecuniary losses,
emotional pain, suffering, inconvenience, mental anguish, loss of
enjoyment of life, and other nonpecuniary losses, and the amount
of punitive damages awarded under this section, shall not exceed,
for each complaining party-

          "(A) in the case of a respondent who has more than 14
and fewer than 101 employees in each of 20 or more calendar weeks
in the current or preceding calendar year, $50,000;

          "(B) in the case of a respondent who has more than 100
and fewer than 201 employees in each of 20 or more calendar weeks
in the current or preceding calendar year, $100,000; and

          "(C) in the case of a respondent who has more than 200
and fewer than 501 employees in each of 20 or more calendar weeks
in the current or preceding calendar year, $200,000; and

          "(D) in the case of a respondent who has more than 500
employees in each of 20 or more calendar weeks in the current or
preceding calendar year, $300,000.

     "(4) CONSTRUCTION.- Nothing in this section shall be
construed to limit the scope of, or the relief available under,
section 1977 of the Revised Statutes (42 U.S.C. 1981).

"(c) JURY TRIAL.- If a complaining party seeks compensatory or
punitive damages under this section-

     "(1) any party may demand a trial by jury; and

     "(2) the court shall not inform the jury of the limitations
described in subsection (b)(3).

"(d) DEFINITIONS.- As used in this section:

     "(1) COMPLAINING PARTY.-The term 'complaining party' means-

          "(A) in the case of a person seeking to bring an action
under subsection (a)(1), the Equal Employment Opportunity
Commission, the Attorney General, or a person who may bring an
action or proceeding under title VII of the Civil Rights Act of
1964 (42 U.S.C. 2000e et seq.); or

          "(B) in the case of a person seeking to bring an action
under subsection (a)(2), the Equal Employment Opportunity
Commission, the Attorney General, a person who may bring an
action or proceeding under section 505(a)(1) of the
Rehabilitation Act of 1973 (29 U.S.C. 794a(a)(1)), or a person
who may bring an action or proceeding under title I of the
Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.).

     "(2) DISCRIMINATORY PRACTICE.-The term 'discriminatory
practice' means the discrimination described in paragraph (1), or
the discrimination or the violation described in paragraph (2),
of subsection (a)."