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Calculating Retaliation Damages

Published January 20, 2023

When an employer punishes an employee for asserting their rights against employment discrimination by participating in protected activities defined by the Equal Employment Opportunity Commission (EEOC), the employee may have grounds for a retaliation complaint. If the EEOC fails to resolve the case internally, the employee has the right to pursue employment discrimination damages through litigation. Due to the numerous variables that must be considered when determining accurate settlement values, legal professionals often rely on expert calculations and witness testimony of experienced forensic economists.

The Knowles Group has been calculating economic loss & damage and serving as economic expert witness for the legal community since 1979. If you or your client are involved in retaliation litigation, contact us today to discuss how our services can support the outcome of your case.

What Is Retaliation?

The EEOC defines retaliation as a form of employment discrimination resulting from adverse action taken by an employer, such as reducing hours, demoting, or terminating an employee in response to the report of unlawful practices. According to Title VII of the Civil Rights act, an employer cannot discriminate against an employee who is opposed to unlawful practices. When an employee argues employer retaliation, they must prove

  1. They asserted their right to engage in a “protected activity” by reporting the unlawful practice.
  2. The employer took adverse action against them
  3. Retaliation caused the employer’s adverse action

The employer must then prove there was a legitimate, non-retaliatory reason for their actions, after which the employee must demonstrate how the employer’s action was, in fact, discriminatory and the non-retaliatory reasoning, a simple pretext. Only then will the legitimacy of the retaliation claim be determined.

What is the Average Value of Retaliation Cases in the United States?

Since most cases are resolved through private settlement, it is impossible to determine an average retaliation settlement value. However, according to EEOC data, wrongful termination cases settled out-of-court can range between $5,000 to $80,000, with an estimated average of $40,000. Additional studies of wrongful termination cases found that approximately 10% result in a verdict of $1,000,000 or more. However, research has shown that higher settlements occur when

  1. The employee refuses the first settlement offer made by the employer.
  2. The former employer is a large company.
  3. A lawsuit is officially filed, and the employee initiates the discovery process to find evidence.
  4. When the wrongful termination is related to race, disability, or gender, particularly those involving physical harm or resulting in mental health issues.

Is There A Formula For Retaliation Damage Calculations?

When completing retaliation damage calculations, expert forensics must consider several factors to arrive at an accurate settlement value, including age, job type, education, expected career length, loss of earning capacity, and pain and suffering. An individual cannot complete these calculations accurately through a free online resource. It takes years of experience to determine a reasonable case value. A highly simplified formula would be as follows

Economic Damages = Back Pay + Front Pay + Medical Expenses + Legal Expenses
Non-Economic Damages = Compensatory Damages
Total Settlement Value = Economic Damages + Non-Economic Damages + Punitive Damages

Hypothetical Example

While working as a nurse at a local hospital, Mary Martinson noticed that one of her coworkers, a long-time nurse, was verging on abusive behavior when handling patients. After reporting the incident to her direct supervisor, she claimed to be subject to “constant hostility” from various staff members, including reduced hours, interference with her duties, being ignored by superiors, condescending comments, and unmanageable changes to her schedule, which led to severe emotional distress.

Eventually, she reported this hostile work environment to upper management, who “strongly recommended” she didn’t make any further trouble with additional reports. In response, she stated she would file a report with the EEOC, and two weeks later, was terminated based on anonymous complaints that she was not adequately performing her duties.

Retaliation Damage Categories Included in Calculations

Expert forensics must consider various retaliation damage categories when completing calculations. These damage categories include

  • Back Pay
  • Front Pay
  • Compensatory and Punitive Damages
  • Legal Expenses

Back Pay

Back pay includes the wages, fringe benefits, additional compensation, and other economic damages the employee would have received from the date of the retaliation up to the date of final judgment minus any income the employee has earned since their termination. Back pay damages include

  • Lost wages
  • Deserved pay raises
  • Lost benefits such as health and dental insurance
  • Retirement or pension contributions
  • Stock options and other vested interests

Based on the evidence provided, the court determined that Martinson was entitled to back pay that would have accrued from the time of her termination, totaling $95,000, for the wages and benefits she would have earned had she remained employed by the hospital.

Front Pay

Front pay compensates the employee for future lost earnings capacity, lost opportunities such as promotions, and other career damage. Like with back pay, the plaintiff must also make a good-faith effort to mitigate these damages. If a case involves lost promotions or career growth, an expert witness may be needed to estimate the cost of the retaliation.

The court determined that Martinson would not receive front pay due to a lack of effort to mitigate damages. When the court requested it, Martinson was unable to describe her job search effort thoroughly, nor was she able to estimate her job prospects.

Compensatory Damages

Despite any wage loss, a claimant may be entitled to compensatory damages the retaliation caused (within federal limits), including pain and suffering, emotional distress, harm to reputation, medical bills, job search costs, and other out-of-pocket expenses.

After her termination, Martinson claimed to experience emotional distress, including nightmares, depression, decreased appetite, and anxiety. She could support these claims with evidence provided by doctors and psychologists she had been seeing since being terminated. As a result, the court awarded $45,000 in compensatory emotional distress damages.

Punitive Damages

The court may also award punitive damages (within federal limits) to punish the employer in particularly egregious cases, such as those involving fraud, malice, or oppression. To win such damages, the employee must provide evidence that meets an exceptionally high standard of proof. For the court to award punitive damages, an officer, director, or “managing agent” of the company must have done the egregious act.

Based on her thorough documentation of the reports she completed with the hospital’s chain of command, the court decided to award additional punitive damages for the malicious and oppressive behavior of the management staff. The court determined that $65,000 in punitive emotional distress damages was a fair punishment for their behavior.

Legal Expenses

If the employee wins the retaliation case, they may also be entitled to have their attorneys fees covered by the defendant to reimburse reasonable lawyer’s fees, filing fees, and court fees. However, the employer cannot win legal expenses against the employee.

Martinson’s lawyer charged 30% of the total settlement value. Based on the $205,000 settlement total, the hospital was required to pay $61,500 for Martinson’s attorneys fees.

The Employee Has a Duty to Mitigate Damages

It is important to note that courts impose a strict duty on wrongfully terminated employees to “mitigate damages” by seeking comparable employment as soon as reasonably practicable following their dismissal. The employee must keep careful records of their job search to provide substantiating evidence of their efforts in discovery.

An employee who fails to mitigate damages or properly document their efforts will lose their right to recover lost wage damages. Likewise, an employee collecting disability rather than unemployment when they are capable of working may lose their right to lost wage damages. However, this does not mean the employee must accept an inferior job, nor do they have to move to another city or state to mitigate damages.

Method of Procedure for Pursuing Retaliation Damages

When an employee wishes to report employer retaliation, they must begin by filing a complaint with the Equal Employment Opportunity Commission (EEOC) before they can pursue the case through litigation. After the charge is filed, EEOC will notify the employer and begin an investigation. Based on the findings of the investigation, EEOC will recommend one of the following courses of action

  1. If EEOC determines reasonable cause for the charge, both parties will be invited to join the agency in the informal conciliation process to resolve the charge through a private settlement.
  2. If conciliation does not resolve the charge, EEOC may use its authority to file a federal lawsuit against the employer. Alternatively, if EEOC chooses not to litigate, the employee will receive a Notice of Right to Sue, at which point the employee may file a federal lawsuit in federal court within 90 days.
  3. Likewise, if EEOC cannot determine a reasonable cause for the charge, the employee will receive a Dismissal and Notice of Rights informing them of their right to file a federal lawsuit within 90 days of receipt.

We Provide Expert Damage Calculations and Witness Testimony in Employment Discrimination Cases

The Knowles Group has provided professional economic services to thousands of attorneys across the United States and Canada, in both federal and state courts, since 1979. Our firm will complete thorough documentation reviews and in-depth economic research before providing conclusions on potential economic loss presented in deposition or trial through expert witness testimony.

If you represent a plaintiff or defendant involved in an employment discrimination case, including those involving retaliatory termination, contact us today to schedule a free consultation to discuss your case.

Eric Knowles, MBA

The Knowles Group has been providing professional economic services to the legal community since 1979. The firm has worked on behalf of thousands of attorneys in a dozen states and Canada. Testimony has been provided in both federal and state venues.