A wards of punitive damages have been allowed since the 1991 Civil Rights Act amended Title VII, and they are the worst fear of employers facing unlawful discrimination or harassment litigation. From the perspective of the plaintiff and his or her attorney, such damages are the bread and butter of a Title VII lawsuit. Punitive damages dramatically increase what would otherwise be money damages in an amount limited to the employee's lost wages and other damages directly caused by the employer's actions, which the employee has a legal duty to mitigate by seeking and accepting alternative employment, to a multiple of that figure. A punitive damages award in favor of a single employee can have a major impact on an employer's financial resources; indeed, the law is designed to have that consequence.
A recent decision of the U.S. Supreme Court, Kolstad v. American Dental Association, has helped to define the scope of punitive damages in the Title VII 1 context. The decision also offers guidance to federal trial courts when a plaintiff seeks to hold an employer vicariously liable for punitive damages based on the discriminatory conduct of managers and supervisors.
The 1991 Civil Rights Act contains a typically vague explanation of the circumstances under which punitive damages are available under Title VII: "A complaining party may recover punitive damages under this section against a respondent . . . if the complaining party demonstrates that the respondent engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual" (29 USC ยง1981a (b)). Prior to the Kolstad decision, plaintiffs and defendants in Title VII litigation fought intense and expensive battles over the meaning of this language and the criteria that should be considered in determining the availability of punitive damages. The result-