Punitive Damanges - New Supreme Court Decision

SUPREME COURT DETERMINES PUNITIVE DAMAGES
STANDARD UNDER TITLE VII AND THE ADA

In the recent Supreme Court case, Kolstad v. American Dental Association, the Court created a two-step test for punitive damages awards under Title VII and the Americans with Disabilities Act (ADA). First, a plaintiff must show that the discriminating actor acted with "malice" or "reckless indifference" to the individual’s federally protected rights. In reaching this conclusion, the Supreme Court rejected arguments that the conduct must be "egregious" to satisfy the statute’s requirements for a punitive damages award.

After the plaintiff has shown malice or reckless indifference by the discriminatory actor, the plaintiff must then show that the employer is vicariously liable for the actor’s discriminatory actions. The Court rejected the common agency principle that an employer is responsible for the acts of its managers that are within the scope of their employment. Instead, the Court held that an employer may escape vicarious liability for punitive damages if it can show that the discriminatory employment decisions of its managers were contrary to the employer’s good faith efforts to comply with Title VII.

This case once again emphasizes the importance of good anti-discrimination training and policies.

Posted 6/24/1999