Compensatory and Punitive Damages Caps under Federal Anti-Discrimination Statutes Under Fire

Rob Thomas, Of Counsel

In light of recent District Court and appellate decisions which have significantly reduced jury damages awards in federal discrimination cases based on existing caps on recoverable compensatory and punitive damages, these damages caps are now under scrutiny from both the Equal Employment Opportunity Commission (“EEOC”)’s General Counsel—Karla Gilbride—as well as, potentially, Congress itself.    

Federal Caps on Compensatory and Punitive Damages in Discrimination Matters.

One of the key provisions of the Civil Rights Act of 1991 (the “Act”) is its inclusion of damage limitations for compensatory and punitive damages awards under federal anti-discrimination statutes—notably Title VII of the Civil Rights Act of 1964 (“Title VII”) and the Americans with Disabilities Act (“ADA”).[1]   Per the Act, while compensatory damages for certain nonpecuniary losses (future earning potential, mental and emotional distress, loss of enjoyment of life, etc.) and punitive damages for particularly egregious employer discrimination are available to prevailing plaintiffs, such damages awards are significantly curtailed based on the size of the employer.  For the largest employers (more than 500 employees), these potential damages are limited to $300,000.00 combined, although these caps do not affect backpay or front pay awards, and otherwise do not apply at all to race discrimination claims under 42 U.S.C. § 1981.  Moreover, under the Act, courts may not inform juries about these damages caps when the juries are deliberating as to the amount of damages to award. 

Further, these damages caps have not changed or increased since 1991 and do not scale with inflation, despite some unsuccessful efforts by legislators to either raise the damages caps or remove them altogether. 

Recent Reductions in Jury Awards, EEOC Criticisms, and Possible Congressional Action.  

Because of these damages caps (and the Act’s prohibition against informing juries of the same), multimillion dollar verdicts in anti-discrimination cases are often reduced to a fraction of the juries’ awards.  Recently, on February 1, 2024, the Court of Appeals for the Fifth Circuit reduced an approximately $366 million jury verdict award to approximately $250,000 because of the Act’s limitations on compensatory and punitive damages for Title VII cases.[2]

Similarly, on January 11, 2024, the District Court for the District of Nebraska was recently compelled to reduce an approximately $36 million jury award to a deaf truck driver under the ADA (with the vast majority of the awarded damages constituting punitive damages) to $300,000 in total compensatory and punitive damages based on the Act’s statutory caps.[3] 

The latter decision drew particular criticism from Ms. Gilbride, who noted that the damages cap resulted in a compensatory and punitive damages award of less than one percent of what the jury would have awarded, and that the caps had the effect of stripping juries of their power to deter employers (particularly large employers) from committing intentional discrimination—especially when employers engage in knowing or reckless disregard of the law under circumstances that would warrant punitive damages.  

Now, in addition to Ms. Gilbride’s criticisms, it appears that either modification of the current damages caps, or outright removal of the same, is gaining bipartisan momentum in the House Committee on Education and the Workforce.[4]  While efforts have been made in Congress since 1991 to either modify or remove the damages caps (including a bill from former President Obama and former Secretary of State Hillary Clinton, while they were both senators), such efforts have been unsuccessful.  However, based on reports from within Congress, it appears that the issue may again be ripe for further discussion and debate.

Employer Considerations

Any legislative action on current compensatory and punitive damages caps under the Act is still just a possibility, and there are still arguments to be made in favor of keeping some form of damages cap generally, such as preventing runaway juries from imposing excessive and lopsided punitive damages awards.  Even so, the recent outcry from Ms. Gilbride and the EEOC, and Congress’ apparent attention to the issue suggest that, at a minimum, Congress may attempt to at least raise the amounts of the damages caps in order to reflect inflation and to bring them up to date from 33 years ago when they were first passed.  Campbell Litigation will continue to monitor this issue closely and will update The Rocky Mountain Employer with any developments accordingly.

[1]See 42 U.S.C. § 1981a.

[2]See generally Harris v. FedEx Corporate Services, Inc., --- F.4th ----, 2024 WL 378285 (5th Cir. Feb. 1, 2024) (reversing the verdict in favor of Plaintiff under 42 U.S.C. § 1981 as a matter of law, which resulted in the application of the Act’s damages limitations to the Plaintiff’s retaliation claim under Title VII). 

[3]Equal Employment Opportunity Commission v. Drivers Management, LLC, Case No. 8:18-cv-462 (D. Neb.). 

[4]https://www.law360.com/employment-authority/articles/1796900.