Discrimination – Vicarious Liability Gets More Expensive

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Introduction

The full bench of the Federal Court in Richardson v Oracle Corporation Australia[1] (Richardson) has cited changing community standards as a basis for significantly increasing awards for general damages (ie damages for non-economic loss, such as loss of enjoyment of life) in discrimination matters. In Richardson, the Court increased an award of general damages from AUD18,000 to AUD100,000 indicating that vicarious liability for workplace discrimination will be significantly more expensive for employers going forward.

The Facts and the Decision at First Instance

Ms. Richardson, a technical manager at Oracle Corporation, was sexually harassed on 11 separate occasions by her colleague, Mr Tucker. These instances generally involved Mr. Tucker making comments of a smutty or offensive nature, "I'll be thinking about [your legs] wrapped around me all day", and inviting Ms. Richardson to join him for private liaisons, such as dinner or a weekend in the cabin of Mr. Tucker's boat.

The trial judge, Justice Buchanan, did not criticise Oracle Corporation for the way in which it responded once it became aware of the harassment. However, Justice Buchanan found Oracle Corporation vicariously liable for Mr. Tucker's actions because its policies did not refer to the applicable laws or state clearly that sexual harassment was unlawful behaviour for which Oracle could be vicariously liable. Following this finding, Justice Buchanan awarded Ms. Richardson AUD18,000 in general damages.

Ms. Richardson appealed the decision.

The Decision on Appeal

The Full Federal Court acknowledged that the award of AUD18,000 was consistent with general damages awards in numerous other discrimination cases where there had been no significant psychological trauma or limitations on work. The Court also acknowledged that general damages in the region of AUD100,000 had previously been confined to limited cases in which there was expert evidence of significant psychological trauma and suffering.

However, the Court went on to observe that:

  • community standards now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before 
  • academic commentary suggests that a 'conservative approach' to assessing discrimination damages impedes the 'deep social reform' intended by anti-discrimination legislation
  • there is a need for awards for general damages in discrimination matters to be consistent with the higher general damages awards made in comparable personal injury and workplace bullying matters.

After concluding that the damages awarded in the prevailing discrimination cases did "not reflect the shift in the community's estimation of the value to be placed on these matters", the Court found that the original award of AUD18,000 was "manifestly inadequate" and substituted it with an award of AUD100,000.

An Expensive Change in the Law

A general damages award of AUD100,000 to a victim whose harassment was not extreme and whose ability to work was not impacted has the potential to cause a significant shift in discrimination litigation. It also leaves open the question of what damages might be awarded to a victim who suffers significant psychological trauma following discrimination in the workplace.

Oracle Corporation has until 5 August 2014 to appeal the decision.


[1] Richardson v Oracle Corporation Australia [2014] FCAFC 82

 

Topics:  Damages, Discrimination, Employer Liability Issues, Vicarious Liability

Published In: Civil Remedies Updates, Civil Rights Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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