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Calculating Sexual Harassment Damages

Published November 9, 2022

When an employee is subject to unwanted sexual advances, comments, actions, or remarks about their gender or sexual orientation at work, they may have a claim for sexual harassment. The subjective nature of sexual harassment claims often makes them unique and challenging to resolve. If a sexual harassment case fails to reach an in-house resolution, the claimant may choose to pursue their case through litigation. Due to the abundance of data that the court must take into account during litigation, lawyers often rely on the expertise and testimony of forensic economists to determine accurate damage or settlement values.

At The Knowles Group, we’ve testified as forensic economists for many employment-related legal cases, including sexual harassment claims, in federal and state courts throughout the United States. If you require such services, visit our website to request a complimentary case evaluation today.

What is Sexual Harassment?

The Equal Employment Opportunity Commission (EEOC) defines sexual harassment as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. Although the law does not prohibit simple teasing, offhand comments, and unserious isolated incidents, the behavior constitutes sexual harassment when:

  1. Submission to or rejection of the conduct explicitly or implicitly affects an individual’s employment
  2. Unreasonably interferes with an individual’s work performance
  3. Creates an intimidating, hostile, or offensive work environment

Sexual harassment can occur in various circumstances and manifests in three primary forms, verbal, physical, and visual harassment.

Verbal Harassment

This is the most common manifestation of harassment and includes, but is not limited to, discussing sexual activity, comments about an individual’s body beyond mere courtesy, telling “sexual jokes,” or tasteless sexually-oriented comments, innuendoes, gestures, or actions that may offend others.

Physical Harassment

Physical manifestations of sexual harassment include but are not limited to gestures or physical contact that the individual knows or ought reasonably to know, to be unwelcome, objectionable, or offensive, including but not limited to unnecessary touching or patting, leering (suggestive staring) at a person’s body, lewd sexual gestures, and physical assault.

Visual Harassment

Visual harassment is the most subjective manifestation and includes, but is not limited to, showing anything vulgar, pornographic, or violent in a workplace that someone may find offensive or creates a hostile working environment.

What is The Average Sexual Harassment Settlement Value?

Sexual harassment claims are notoriously difficult to monetize. Since companies settle many claims privately, it is also difficult to determine accurate average values. However, one study dissecting 50 sexual harassment settlements found an average settlement value of approximately $53,000, with a median of $30,000. According to the EEOC, 8,147 beneficiaries recovered more than $299.8M between 2018 and 2021, producing an average settlement value of $36,798. Another study completed in 2006 determined that cases won in trial averaged more than $217,000. There are also cases where sexual harassment leads to wrongful termination, which can further complicate the calculations.

Additional data suggests that class actions and cases involving multiple plaintiffs are more likely to succeed. Moreover, the EEOC is more apt to become involved with group claims, and those cases with EEOC involvement settle for nearly double the amount compared to those without EEOC involvement.

How Are Sexual Harassment Settlements Calculated?

There is no simple formula to determine the value of a sexual harassment lawsuit. The settlement value for each sexual harassment case depends on the unique factors involved. When completing calculations, an expert forensic must consider factors such as back pay and front pay, as well as compensatory and punitive damages. To gain an accurate estimated value, contact a sexual harassment lawyer associated with an experienced forensic economist. A highly-generalized formula would be as follows:

Settlement Value = Total Back Pay + Total Front Pay + Total Compensatory Damages + Total Punitive Damages

Hypothetical Example

Two co-workers sexually harassed the janitor of an office building when they decided to play a prank directed at the janitor. They set up a conference room as though two staff members had used the space for sexual intercourse, including discarded undergarments and condoms containing fluid. Upon entering the room, one of the co-workers invited the janitor to sniff the boxer shorts. Then the janitor proceeded to clean the room in disgust.

After realizing it was a prank, the janitor filed a sexual harassment claim. For a month after, the janitor was victimized and continually harassed for filing the complaint. This led to the janitor suffering acute anxiety and an adjustment disorder. They could not work for two years, and it was determined that they would not return to full-time work for a further two years. The case was settled in court for $156,051 plus legal expenses.

Factors To Consider Regarding Sexual Harassment Damage Calculations

As previously mentioned, expert forensics must consider various factors when calculating damages for sexual harassment cases and collect considerable data to determine an accurate value. Some significant factors included are

  1. Back Pay
  2. Front Pay
  3. Compensatory Damages
  4. Punitive Damages
  5. Legal Expenses

Back Pay

Back pay includes the wages, fringe benefits, additional compensation, and other economic damages a claimant would have received from the date of the harassment up to the date of final judgment. Back pay restitution includes

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

For a plaintiff to receive back-pay awards, they must actively mitigate their financial loss by making a good faith effort to find another job between the lawsuit filing date and final judgment. When the court awards back pay, it will amount to the total lost wages minus the income of their new position.

Example
In our hypothetical case, the janitor was awarded a back pay total of $19,086, including $17,430 in gross lost wages and $1,656 in retirement contributions.

Front Pay

After being sexually harassed, a claimant has the right to return to their former position according to federal law. However, this “reinstatement” is often infeasible, and a claimant may choose to pursue front-pay awards instead. Front pay compensates for wage loss the claimant is likely to incur from the date of litigation judgment into the future. Like with back pay, the plaintiff must make a good-faith effort to mitigate damages. When determining the value of a front-pay award, a jury will consider

  • The claimant’s age
  • The claimant’s pre-incident earnings capacity
  • The claimant’s offered fringe benefits through previous employment
  • The tenure of their previous position
  • The time it will take to find a similar job

Example
In our hypothetical case, the court awarded the janitor a front pay total of $53,805, including $48,338 in future lost income and $5,467 in future loss of retirement contributions.

Compensatory Damages

Despite any wage loss, a claimant may be entitled to compensatory awards for the damages the harassment caused, including pain and suffering, emotional distress, harm to reputation, medical bills, job search costs, and other out-of-pocket expenses.

Example
In our hypothetical case, the janitor was awarded $84,160 in compensatory damages. $74,160 for emotional distress, loss of enjoyment of life, and the offense, humiliation, and intimidation suffered. And $10,000 for future medical treatment for the resulting anxiety and adjustment disorder.

Punitive Damages

The court may also award punitive damages to punish the employer in cases involving particularly bad behavior, such as malice or reckless indifference to the claimant’s rights. For example, suppose the employer was aware of the harassment yet failed to take steps to correct the situation. In that case, they may be subject to punitive damages.

Example
Since the janitor’s employer took the correct steps upon learning about the harassment, the court awarded no punitive damages.

Legal Fees

If the claimant wins the case, they may also be entitled to have their legal fees covered by the defendant to reimburse reasonable lawyer’s fees, filing fees, and court fees.

Example
The janitor’s lawyer charged 30% of the total settlement value. Based on the $156,051 settlement total, the lawyer’s fee was $46,815, which the defendant was required to pay.

Compensation Cap According to Local, State, and Federal Law Regarding

According to federal law, workplace harassment claims have a set limit of $300,000 in total damages, including back pay, front pay, compensatory, and punitive damages. Additionally, federal law caps the amount that can be awarded for punitive and compensatory damages, such as emotional distress or pain and suffering, depending on how many employees work for the company as follows

  • $50,000 for companies with 15-100 employees
  • $100,000 for companies with 101-200 employees
  • $200,000 for companies with 201-500 employees
  • $300,000 for companies with 500+ employees

Depending on the case’s jurisdiction, local or state law may have different or no limits. These compensation caps will determine whether a case proceeds at a local, state, or federal level.

We Provide Expert Damage Calculations For Sexual Harassment 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 or your client are involved in sexual harassment litigation as a plaintiff or defendant, 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.