Wrongful Discharge Cases May Carry Heavy Price Tag

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If an employer engages in illegal discrimination when terminating an employee, that employer should pay compensatory damages related to that termination. Moreover, if the employer acted maliciously in conducting the termination, it could also face punitive damages. Should, however, an employer be subject to duplicative punitive damages? No, because that would be patently unfair.

Recently, however, the WV Supreme Court upheld a $1.6 million verdict in favor of an employee who claimed that his employer wrongfully terminated him because of age discrimination. West Virginia American Water Company v. James A. Nagy (No. 101229, June 15, 2011). Mr. Nagy claimed that his employer wrongfully discharged him, and the jury agreed. Among other damages, the jury awarded Mr. Nagy $350,000 in punitive damages, and over $1 million in past and future lost wages -- even though Mr. Nagy, age 54, found a job within months of his termination earning just less than what he had earned before. Mr. Nagy’s own economic expert calculated Mr. Nagy’s actual out-of-pocket lost income – past and future – to be approximately $52,000. How then, you may ask, could a jury award over $1 million in lost wages if actual lost wages were no more than $52,000?

The answer lies in a concept of law introduced years ago and blindly followed and expanded upon since then. In 1982 the Court decided in Mason County Bd of Educ. v. State Superintendent of Schools that if an employer wrongfully and maliciously discharged an employee, that employee could recover his lost wages, whether or not the employee had received interim or replacement income. The Court described such “unmitigated” or “flat” wage loss awards as an effort “to punish” employers who maliciously discharge employees. Importantly, punitive damages were not available to the employee in that case.

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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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