What’s My Reputation Worth? Fire Me and Find Out

Posted June 14th, 2016.

Categories: Employment Law, The Calculating Lawyer.

employee worth mark guralnick

Can a victim of employment discrimination recover damages for her blemished reputation? That depends. If framed in terms of lost future earnings, a discharged worker may be able to recover even non-pecuniary losses — those kinds of damages that look more like “pain and suffering” or “loss of goodwill” than loss of front pay.

The Civil Rights Act of 1991 added remedial provisions to Title VII which authorize compensatory damages for a plaintiff’s “future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other non-pecuniary losses.” Not only did these amendments spring open the door to a variety of pain-and-suffering claims, but they also triggered a new generation of unspecified claims for non-pecuniary damages in employment litigation.

For example, the Seventh Circuit has recognized the right of a plaintiff to lost future earnings, separate and distinct from her right to front pay. In Williams v Pharmacia, Inc., 137 F. 3d 944 (7th Cir. 1998), the court characterized such lost future earnings as “an intangible non-pecuniary loss” and analogized it to an “injury to professional standing” and an “injury to character and reputation.” Citing the civil rights provisions for non-pecuniary losses, the court distinguished front pay from lost future earnings. It found that front pay compensates the employee for the actual lost earnings from the job, had she been able to return to the job, and measured by the period of time she would have remained working at that job. Lost future earnings, by contrast, compensate the employee for a lifetime of diminished earnings resulting from the reputational harms she suffered as a result of the discrimination she experienced.

employee worth 2 mark guralnick

Today, our federal courts widely recognize the fact that a victim of employment discrimination may thus seek to claim damages to her professional standing, injury to her character and reputation, loss of her future earning capacity and damage to her credit standing, all under the rubric of an intangible non-pecuniary loss. See, e.g., U.S. v. Vulcan Society, Inc., 897 F. Supp. 2d 30 (E.D. N.Y. 2012).

But how do we calculate such a form of lost future earnings?

To calculate lost future earnings, pain and suffering, and other non-pecuniary losses, a judge or jury may require additional relevant evidence, not to mention the possible guidance of an economics expert. Formulas used in personal injury and wrongful death litigation may also provide guidance. Yet, because there is no precise mathematical formula for calculating the intangible losses suffered by a victim of employment discrimination, juries are often asked to agree upon reasonable compensation for a victim’s pain and suffering or other non-pecuniary losses.

The jury’s domain is perhaps sacrosanct, and some may say that no attempt should be made to render the process of assessing such damages more scientific or formulaic. On the other hand, attorneys, arbitrators, judges and jurors who are trying to settle an employment case, or who wish to take the guesswork out of the process of fixing a non-pecuniary loss, may wish to apply a more precise and justifiable approach.

One such approach is to construct a table of multipliers that would tie a victim’s pain and suffering, inconvenience, mental anguish, social isolation, and loss of enjoyment of life to the actual amount of back pay paid or payable in a compensable case. The underlying question asks: what amount, when added to a victim’s back pay, will compensate the victim for his non-pecuniary losses? The formula asks: what number, when multiplied by the total amount of back pay, will produce a dollar amount that fairly and reasonably compensates the victim for his non-pecuniary losses?

In attempting to find such multipliers, it would seem that the longer the victim remains unemployed or otherwise adversely affected by the challenged employment action, and the greater the amount of his back pay, the larger the multiplier should be to properly compensate him for the non-pecuniary aspect of the case. For example, a sample table of multipliers might look like this:

Back Pay Multiplier Non-Pecuniary Damages
$0 to $25,000 0.33 $0 to $8,250
$25,001 to $100,000 0.5 $12,500 to $50,000
$100,001 to $500,000 0.75 $75,000 to $375,000
$500,001 to $1,000,000 0.875 $437,500 to $875,000
$100,000,001 an above 1.0 $1,000,001 and above

Using this sample table, we would apply a multiplier of 0.33 to a back pay award of $25,000 to produce an additional award of $8,250 to compensate the victim for pain and suffering, reputational injury, mental anguish, and related non-pecuniary damages. A victim who remained out of work for a much longer time period, or who experienced a much greater financial loss attributable to job discrimination, and who would thereby be entitled to a back pay award of $400,000, would be entitled to an additional (non-pecuniary) award of $300,000, using the hypothetical 0.75 multiplier shown above.

A table of multipliers could also be applied to psychological costs where pain-and-suffering from loss of employment is a significant part of the claim. Thus, for example, an employee who files suit for sexual harassment and is forced to leave the workplace to avoid a clearly hostile work environment would be entitled to her Title VII damages for back pay and front pay, as well as some unspecified quantum of compensation for her emotional grief, anxiety, shock, and the disruption in her life.

Assuming that the emotional and non-pecuniary damages were significant enough to require the victim to enlist the help of a psychologist, the evidence will likely include the cost of psychological therapy as a specific item of damages. That cost could then be augmented, by a multiplier, to cover the value of the victim’s pain-and-suffering and related non-pecuniary claims. Consider, for example, a variation of the table of multiplier, this time based on therapy costs:

Therapy Costs Multiplier Non-Pecuniary Damages
$0 to $5,000 1.0 $0 to $5,000
$5,000 to $10,000 1.5 $7,500 to $15,000
$10,001 to $50,000 2.0 $20,000 to $100,000
$50,001 and above 2.5 $125,000 and above

In this scenario, a victim who incurs $10,000 in psychotherapy costs as a result of her isolation, displacement, and mixed emotional problems following her sexual harassment in the workplace would be entitled to reimbursement of her therapy costs plus an additional $15,000 as non-pecuniary damages to cover her pain and suffering.

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