Publication

June 9, 2009Client Alert

Update: Governor Doyle Signs 2009 Act 20 Permitting a Complainant’s Recovery of Compensatory and Punitive Damages in Wisconsin Employment Discrimination Cases

In a May 7, 2009, article entitled, Wisconsin Legislature Passes Bill Making Compensatory and Punitive Damages Available Under State Law Discrimination Claims, our colleague, Eric Rumbaugh, notified readers that both houses of the Wisconsin legislature passed Senate Bill 20 (SB-20) and that the bill was awaiting signature by Governor Doyle.

On Monday, June 8, 2009, Governor Doyle signed 2009 Wisconsin Act 20, which amends the Wisconsin Fair Employment Act (“WFEA”) by permitting complainants in employment discrimination, unfair genetic testing, and unfair honesty testing cases to seek and to be awarded compensatory and punitive damages. (To view a copy of the enrolled Act, please visit http://www.michaelbest.com//files//upload/Enrolled-Act-2009-Senate-Bill-20.pdf.) Under the former version of the WFEA, employees were only entitled to attorney’s fees and “make whole” remedies, such as back pay, front pay or reinstatement. This law marks a significant change in Wisconsin employment law, and is likely to increase the amount of employment litigation before the Wisconsin Equal Rights Division (“ERD”) and Wisconsin state courts, as well as create significant additional costs for employers.

To Whom Does the Act Apply?

The Act applies to all employers previously subject to the WFEA, except that it exempts those employers, labor organizations, and employment agencies employing fewer than 15 individuals for each working day in each of 20 or more calendar weeks in the current or preceding year from paying the additional damages. This change parallels federal civil rights laws that often only cover those employers employing 15 or more persons.

To What Types of Claims Does the Act Apply?

The compensatory and punitive damages are available to a person who prevails on a claim of discrimination in employment, unfair honesty testing, or unfair genetic testing under the WFEA. Under the WFEA discrimination in employment includes discrimination on the basis of age, race, creed, color, disability, marital status, sex, national origin, ancestry, sexual orientation, arrest record, conviction record, membership in the National Guard, state defense face, or any other reserve component of the U.S. or state military, or use or non-use of lawful products off the employer’s premises during non-working hours. Consequently, Wisconsin complainants now have an avenue for pursuing compensatory and punitive damages for claims such as sexual orientation, marital status, and arrest/conviction record discrimination; damages not available under federal law.

What Damages Are the Compensatory and Punitive Damages Intended to Address?

Compensatory damages are damages intended to compensate someone for the individual’s actual losses. Generally, those include claims for future economic losses, for pain and suffering, emotional distress, mental anguish, loss of enjoyment of life, and other non-economic losses. With respect to punitive damages, the Act incorporates Wisconsin’s general punitive damages statute that makes such damages available if the complainant submits evidence showing that the employer acted maliciously toward the complainant or in an intentional disregard of the complainant’s rights.

What Is the Procedure for Obtaining the Additional Damages?

A complainant pursues these additional damages after the conclusion of the administrative proceedings before the Wisconsin Department of Workforce Development (“Department”). More specifically, at the conclusion of all administrative proceedings resulting in a favorable finding for the complainant, the Act requires the Department visa-vie the examiner or, where applicable, the Labor and Industrial Review Commission (“LIRC”) to send a notice to the complainant notifying the complainant of the complainant’s right to bring an action in Wisconsin state court within 60 days after the date on which a copy of the final decision is mailed to the complainant to recover compensatory and punitive damages. If the employer files a petition for judicial review of the underlying liability finding by the Department with the Wisconsin circuit court, the court will consolidate the employer’s petition for review with any action filed by the complainant for additional damages.

The procedure for determining and awarding the compensatory and punitive damages is not entirely clear. However, the amendment indicates that the circuit court shall order damages in an amount that the circuit court or jury finds appropriate, plus reasonable costs and attorney’s fees incurred indicating that damages may be decided by a court or by a jury. Consequently, although the amendment does not allow for a new court trial on the issue of liability, the Act will likely be interpreted to allow for a jury trial on damages.

When Does the Law Become Effective? Will It Affect Pending Claims?

The Act takes effect on the day after publication, or on the second day after publication of the 2009-2011 biennial budget act, whichever is later.

The additional damages will not be available for pending claims. The Act only applies to acts of discrimination, unfair genetic testing, and unfair honesty testing committed on or after its effective date.

Are There Any Caps on Damages?

Yes. The sum of the amount of compensatory damages for future economic losses and for pain and suffering, emotional distress, mental anguish, loss of enjoyment of life, and other non-economic losses combined with the amount of punitive damages may not exceed the following:

  1. For a defendant that employs 100 or fewer employees for each working day in each of 20 or more calendar weeks in the current or preceding year, $50,000;

  2. For a defendant that employs more than 100 but fewer than 201 employees for each working day in each of 20 or more calendar weeks in the current or preceding year, $100,000;

  3. For a defendant that employs more than 200 but fewer than 501 employees for each working day in each of 20 or more calendar weeks in the current or preceding year, $200,000;

  4. For a defendant that employs more than 500 for each working day in each of 20 or more calendar weeks in the current or preceding year, $300,000;

How Will This Impact Employers?

Summarily, the Act impacts employers negatively and complainants positively. The most obvious impacts are that many more complainants will decide to keep their discrimination cases in the state administrative and court forum, employers now have increased exposure to damages, and complainants and their attorneys have a new bargaining chip at the settlement table. Some additional impacts of the amendments to the Act include:

 

  • A jury that is informed that the employer engaged in discrimination, unfair genetic or unfair honesty testing will be asked simply to decide damages.

  • State court judges will be exposed to a greater number of discrimination cases.

  • Lack of summary judgment procedures at administrative level gives complainants an advantage in keeping claim for compensatory and punitive damages alive.

  • Increased discovery, including complainants seeking employer financial information.

  • Complainants opting for state forum where law is almost always more favorable, less intimidating, and less formal.

  • More important to “win” at the initial stages.


The Bright Side – No 10% Surcharge and Other Minor Victories

The only bright side to this law from most employers’ perspectives is that the final Act does not exactly mirror the original bill’s contents and proposed amendments. For example, the initial bill allowed the court to impose a 10% surcharge payable to the court and/or ERD. In addition, it provided for a longer limitations period in which a complainant could file a claim for the additional damages. There was also no carve-out for small employers or cap on damages.

Breakfast Briefing Schedule

Please join members of Michael Best’s Labor and Employment Law Practice Group as they discuss these changes and the implications on your business.  To learn more about the new law, please sign up to attend one of the following breakfast briefings:

In Madison
Wednesday, June 24, 2009 
Register for Madison seminar

In Milwaukee
Thursday, July 16, 2009
Register for Milwaukee seminar

Times:
7:30 – 8:00 a.m. – Registration & Continental Breakfast
8:00 – 9:00 a.m. – Presentation

Seating is limited.

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