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The 1991 Civil Rights Act: new rules for Utah employers.

New Rules for Utah Employers

After years of debate, negotiation, and a 1990 presidential veto, the 1991 Civil Rights Act has become law. The act makes significant changes to federal discrimination laws, making it easier for persons to prove discrimination and allowing them to recover greater amounts in damages. The act's principal purposes: to "restore" employee rights that had been limited by recent United States Supreme Court decisions and to add new rights and remedies for victims of employment discrimination. For Utah employers, the new rights are probably more significant than the "restored" rights.

Compensatory and Punitive Damages

The act establishes the right to recover compensatory and punitive damages. Under prior law, employees who could prove they had lost a job, promotion, or pay increase because of their race, sex, national origin, or religion could recover only the amount of "back pay" they had lost, plus their attorney's fees. They could not recover any amount to compensate them for any other monetary losses, or for pain and suffering. Nor could employees recover any amount to "punish" the perpetrator.

Congress has now made compensatory damages available in all cases where the employee claims to be a victim of "intentional discrimination." Intentional discrimination covers most employment discrimination cases filed. Moreover, punitive damages also may now be assessed against private (non-governmental) employers when the employee can prove the employer has engaged in a discriminatory practice "with malice or with reckless indifference" to the employee's federally protected rights.

As part of a compromise, Congress placed limits on the amount of compensatory and punitive damages that can be recovered.

These amounts are in addition to the amount of back pay, front pay, and attorney's fees which an employee may otherwise recover. The caps also do not apply to race discrimination claims, nor is it likely they will be extended to cover such claims. It is more probable the caps will simply be removed. They are already under attack as unconstitutional in the courts. Senator Edward Kennedy, D-Mass., has introduced legislation to eliminate all the caps, while Utah's Senator Hatch wants to eliminate all caps except for employers with 50 or fewer employees.

Right to a Jury Trial

Under prior employment discrimination statutes, only employees claiming race discrimination had the right to a jury trial. Under the new act, all claims of intentional discrimination may be tried by a jury instead of a judge, upon the request of either party. The act specifically provides that the jury will not be informed of the limits on compensatory and punitive damages established by the act.

Most lawyers who represent employers in discrimination suits find their clients are better off before a judge than before a jury. This experience is consistent with formal studies of the results of employment litigation, and with juror polls. So the practical effect of the act's jury trial provision for employers is that their defenses to discrimination claims will now be heard in a less sympathetic forum.

Quotas and the Utah Employer

The "quota" issue which received the most attention in the media probably has little significance for Utah employers. Before 1989, if an employee could prove that a facially neutral job requirement such as a high school diploma had a "disparate impact" on a protected class, the employer was required to shoulder a very heavy burden of proving a "business necessity" for the challenged practice. In 1989, the Supreme Court lightened the employer's burden substantially. The act returns the law to the way it was before the 1989 Supreme Court case. Because the Utah labor force has very few minorities likely to be adversely affected by such neutral job requirements, little disparate impact litigation has occurred here.

"Mixed Motive" Cases and Expert Witness Fees

Also intended to restore previous rights is a new rule for so-called mixed motive discrimination cases, in which an employer is found to have been motivated partly by discriminatory and partly by legitimate reasons in making a challenged employment decision. Under the new act, if the employee is able to prove that the employer was motivated even in part by unlawful considerations such as race or sex, the employee will, at a minimum, be entitled to recover his or her reasonable attorney's fees and also an injunction prohibiting similar action by the employer in the future. Under prior law, an employer who was motivated only in part by unlawful considerations could still escape any liability by proving he would have made the same decision even absent a discriminatory motive. The practical effect of this change is to eliminate a significant employer defense in "mixed motive" cases.

The act further provides that "expert witness" fees may be included as a part of the attorney's fees that can be awarded to the prevailing party under the discrimination laws. This provision puts employers at additional risk in cases where the parties summon experts such as doctors, psychologists, or accountants, to support their case. In discrimination cases, employers almost always turn out to be the "losing party" who must pay attorney's fees. That is because under prior court decisions not affected by the act, even plaintiffs who lose their cases cannot have an employer's attorney's fees assessed against them, unless their claims turn out to be frivolous. On the other hand, all an employer has to do in order to be liable for the plaintiff's fees (and now expert witness fees as well), is to lose the case.

Defending Claims before a Suit Requires It

The addition of new damage remedies to employment discrimination cases, coupled with the assignment of those cases to juries for fact finding, will make the outcome of discrimination claims less certain and will increase the cost of unfavorable results. These increased risks should encourage employers in Utah and elsewhere to pay closer attention to employee disputes as they develop and before any suit has been filed. The best way to reduce the risk of an unfavorable outcome is for employers to act early in the process by promptly addressing employees' legitimate concerns and by making sure there are sound, documented grounds for their employment decisions. By being "proactive" in the early stages of an employee dispute, an employer may be able to prevent it from hardening into a lawsuit. Even when a suit cannot be avoided, employers often are in the unique position of being able to establish parts of the very record by which their actions will be judged. The act thus poses substantial risks for the unwary employer; it also encourages the alert employer to diminish those risks.

Employees' Maximum Damages
100 employees or less $50,000
101-200 employees $100,000
201-500 employees $200,000
501 employees or more $300,000

David A. Anderson is chairman of the Labor and Employment Law Section at Parsons Behle & Latimer, a Salt Lake City law firm.
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Author:Anderson, David A.
Publication:Utah Business
Date:Mar 1, 1992
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