Case Name: DEPARTMENT OF CIVIL RIGHTS ex rel CORNELL v. EDWARD W SPARROW HOSPITAL ASSOCIATION
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1985-11-22
Citations: 423 Mich. 548
Docket Number: Docket Nos. 70546, 70578
Parties: DEPARTMENT OF CIVIL RIGHTS ex rel CORNELL v EDWARD W SPARROW HOSPITAL ASSOCIATION
Judges: Cavanagh and Boyle, JJ., concurred with Williams, C.J._
Reporter: Michigan Reports
Volume: 423
Pages: 548–593

Head Matter:
DEPARTMENT OF CIVIL RIGHTS ex rel CORNELL v EDWARD W SPARROW HOSPITAL ASSOCIATION
Docket Nos. 70546, 70578.
Argued March 5, 1985
(Calendar No. 2).
Decided November 22, 1985.
Starrla K. Cornell filed a complaint with the Department of Civil Rights against Edward W. Sparrow Hospital following discharge from her employment for refusing to comply with a hospital dress code for laboratory personnel. A hearing referee found in favor of the hospital, but the Civil Rights Commission reversed, awarding Ms. Cornell, inter alia, back pay, finding discrimination on the basis of sex under the Fair Employment Practices Act. The hospital appealed to the Ingham Circuit Court, and the court, Robert Holmes Bell, J., reviewing the matter de novo, reversed the award of back pay, holding that the dress code did not amount to such purposeful and invidious discrimination as to prohibit the attainment of gainful employment. The Court of Appeals, M. J. Kelly, P.J., and T. M. Burns, J. (Mackenzie, J., dissenting), affirmed in an opinion per curiam and rejected the claimant’s assertion of entitlement to attorney fees under the Civil Rights Act (Docket Nos. 56528, 56535). The parties appeal.
In opinions by Chief Justice Williams, joined by Justices Cavanagh and Boyle, by Justice Ryan, joined by Justice Riley, and by Justice Brickley, the Supreme Court held that the plaintiff should be awarded back pay.
Chief Justice Williams, joined by Justices Cavanagh and Boyle, stated that an employee who is found to have been a victim of unlawful discrimination under the Fair Employment Practices Act generally should be awarded back pay. Back pay should be denied only where the reasons for denial, if applied generally, would not frustrate the central purposes of the act to eliminate discrimination and to make whole the victim of discrimination.
References for Points in Headnotes [1, 2, 4, 5] Am Jur 2d, Civil Rights §§ 431 et seq. Award of back pay in suit under Title VII of Civil Rights Act of 1964, as amended by Equal Employment Opportunity Act of 1972 (42 USCS 2000e et seq.), for discriminatory employment practices. 21 ALR Fed 472. [3, 6] Am Jur 2d, Civil Rights § 441. Employee’s duty to mitigate losses for NLRB backpay award under 29 USCS § 160(c) as requiring skilled employee to seek interim job in different line of work. 32 ALR Fed 511.
1. The central purposes of the Fair Employment Practices Act were twofold: to eliminate discrimination and to make whole persons who suffered through discrimination. Following a finding of unlawful discrimination by an employer, an employee should not be denied back pay except for reasons which, if applied generally, would not defeat the central purposes. The purpose of eradicating discrimination has consistently been recognized in case law in construing the fepa and its successor, the Civil Rights Act. Like Title VII of the federal Civil Rights Act of 1964, the fepa also dealt with injuries that are largely economic in nature and had as a second major purpose making whole those who had suffered injury on account of discriminatory practices. Under federal law, back pay has been awarded in such cases as a matter of course, and the Legislature is presumed to have been aware of the practice when it enacted the back-pay provision of the fepa.
2. In this case, the trial court applied an incorrect standard in deciding whether to award back pay to the claimant. Contrary to the holding of the trial court, whether the discrimination was purposeful and invidious in nature was not controlling. The fepa did not seek to eliminate only purposeful and invidious discrimination, but all discrimination. An award of back pay serves two purposes: it encourages employers to examine and evaluate conditions of employment with an eye toward eliminating any that have a discriminatory effect, and it compensates the victim of discrimination. Awarding back pay only where purposeful and invidious discrimination is found would thwart both purposes.
3. Nor was the denial of back pay justified on the ground that the claimant failed to mitigate damages by complying with the dress code while simultaneously challenging its validity. Because the claimant actually sought employment elsewhere, the question of general mitigation does not arise. The hospital’s offer of employment was not unconditional, but was specifically conditioned upon the claimant’s compliance with the unlawful dress code. While as a general rule, a wrongfully terminated employee who seeks damages must accept employment either with a different employer or with the same employer in order to mitigate damages if the job is unconditional except as to back pay, nonetheless, where an employer refuses to allow an employee to return to work unless that employee complies with an unlawful discriminatory condition of employment, the employee has not failed to mitigate damages.
4. It is not necessary to address the question whether the plaintiff was constructively discharged because she was actually discharged. At all times she was ready, willing, and able to work. The findings of both the hearing referee and the commission included statements that the dress code was made a condition of the plaintiff’s employment and that she was "terminated” for failure to comply with its requirements. Even if the constructive-discharge doctrine were to be applied, the plaintiff would be eligible for back pay because a reasonable employee in her position would have felt compelled to resign. The minority’s analysis of the doctrine to justify denial of back pay because management’s ability to manage would be impaired and because emotional distress damages may be available to compensate a victim of discriminatory employment conditions must be rejected as inadequate and as fundamentally undermining the intent of the Civil Rights Act.
5. The question whether the claimant is entitled to attorney fees was not properly preserved for appellate review.
Justice Ryan, joined by Justice Riley, concurring, agreed that the plaintiff was fired for refusing to comply with a discriminatory dress code and that she is entitled to back pay, but did not agree with the criticism of the rationale underlying the constructive-discharge doctrine. The constructive-discharge doctrine performs, inter alia, the useful function of weeding out frivolous claims. In a proper case, but not in this case, it might be appropriate for the Court to adopt the doctrine as the standard in determining whether back pay is due an employee who has voluntarily resigned. Back pay should be awardable only where an employee is discharged for refusal to comply with a discriminatory condition of employment, not regardless whether the employment is terminated by discharge or resignation. In this case, back pay should be awarded only to the extent that the plaintiff is determined to have been fired.
Justice Brickley, concurring, agreed that the plaintiff should be awarded back pay, but wrote separately to express agreement with that portion of Justice Levin’s dissent which states that constructive-discharge analysis should be applied in this case. Application of that analysis would result in a determination that the discriminatory action of the employer resulted in constructive discharge of the plaintiff.
Reversed in part, affirmed in part, and remanded.
Justice Levin, writing separately, stated that, as developed under federal case law, an employee who is not formally discharged and who declines to work under an unlawful working condition may be awarded back pay if the working condition is so difficult or unpleasant that a reasonable person in the employee’s shoes would have felt compelled to resign. If the working condition is found to be so difficult or unpleasant, the employee is deemed to have been constructively discharged, and back pay is awarded. If the working condition, although unlawful, is not so difficult or unpleasant, the employee is not deemed to have been constructively discharged and ordinarily is entitled to be reinstated, but is not entitled to back pay.
The constructive-discharge analysis applies whenever an employee is in a position to continue working and chooses not to do so. When an employer discharges an employee, the employee cannot mitigate damages by continuing to work for the employer. If the employee is not discharged, the employee ordinarily must, unless the unlawful discriminatory condition is so difficult or unpleasant, continue working while challenging the unlawful discriminatory condition. Because the employee is generally in a better position to mitigate damages and can ordinarily be made whole retroactively more readily than the employer, the burden has been placed on the employee, not the employer, to endure, at least temporarily, an endurable perceived injustice.
The central question is not whether a termination is classified a resignation or a discharge, but whether an employee was justified in failing to mitigate damages by working under the challenged discriminatory condition while pursuing administrative and judicial remedies. This issue is not resolved by drawing a distinction between whether the employee quit or should be deemed to have been fired. In this case, the plaintiff was not discharged. She had the option of continuing employment under discriminatory conditions.
The plurality appears to hold that whenever an employer imposes a mandatory condition of employment, and the employee chooses to leave the job rather than work under the condition, constructive-discharge analysis does not apply; imposing the condition is deemed tantamount to actual discharge. This is an unduly narrow interpretation of the constructive-discharge doctrine that ignores the case law. Ordering an employee to wear a uniform as a condition of continued employment does not differ from requiring an employee to accept less pay or a transfer as a mandatory condition of continued employment. The statement by the plaintiff’s supervisor, "go home . . . and change clothes,” does not justify a finding of actual discharge. She was told to go home so she could change her clothes. The words "go home” added nothing to the statement that she would be required to comply with the working condition; they were merely incidental to the statement.
It is apparent that the circuit court did not apply the constructive-discharge analysis in deciding the back-pay issue. The question was not whether the dress code constituted purposeful and invidious discrimination, but rather whether the dress code constituted a working condition so difficult or unpleasant that a reasonable person in the employee’s shoes would have felt compelled to resign. Thus, the case should be remanded to the circuit court for reconsideration of its decision regarding back pay and for application of the constructive-discharge mode of analysis.
119 Mich App 387; 326 NW2d 519 (1982) reversed in part and affirmed in part.
Opinion by Williams, C.J.
1. Civil Rights — Employment Discrimination — Fair Employment Practices Act — Back Pay.
An employee who is found to have been a victim of unlawful discrimination under the Fair Employment Practices Act generally should be awarded back pay; back pay should be denied only where the reasons for denial, if applied generally, would not frustrate the central purposes of the act to eliminate discrimination and to make whole the victim of discrimination (MCL 423.307[h]; MSA 17.458[7][h], repealed by 1976 PA 453, MCL 37.2101 et seq.; MSA 3.548[101] et seq.).
2. Civil Rights — Employment Discrimination — Fair Employment Practices Act — Back Pay.
Denial of back pay upon Ending that an employee was a victim of unlawful discrimination on the ground that the discrimination was not purposeful and invidious in nature was inconsistent with the purposes of the Fair Employment Practices Act; the act did not seek to eliminate only purposeful and invidious discrimination, but all discrimination (MCL 423.307[h]; MSA 17.458[7][h], repealed by 1976 PA 453, MCL 37.2101 et seq.; MSA 3.548[101] et seq.).
3. Civil Rights — Employment Discrimination — Mitigation of Damages.
As a general rule, a wrongfully terminated employee seeking damages must accept employment either with a different employer or with the same employer in order to mitigate damages if the job is unconditional except as to back pay; nonetheless, where an employer refuses to allow an employee to return to work unless that employee complies with an unlawful discriminatory condition of employment, the employee has not failed to mitigate damages.
Opinion by Ryan, J.
4. Civil Rights — Employment Discrimination — Back Pay.
Back pay should be awardable only where an employee is discharged for refusal to comply with a discriminatory condition of employment, and not where employment is terminated because of the employee’s resignation.
Separate Opinion by Levin, J.
5. Civil Rights — Employment Discrimination — Constructive Discharge — Back Pay.
An employee who is not formally discharged and who declines to work under an unlawful working condition may be awarded back pay if the working condition is so difficult or unpleasant that a reasonable person in the employee’s shoes would have felt compelled to resign; under such conditions, the employee is deemed to have been constructively discharged; however, where the working condition, although unlawful, is not difficult or unpleasant, the employee is not deemed to have been constructively discharged and, while ordinarily entitled to reinstatement, is not entitled to back pay.
6. Civil Rights — Employment Discrimination — Mitigation of Damages.
An employee who is instructed to work under an unlawful discriminatory condition has the burden, unless the condition is so difficult, or unpleasant that a reasonable person would feel compelled to resign, to endure, at least temporarily, a perceived injustice while challenging the condition.
Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, Felix E. League, Jack Blumenkopf, and Michael J. Moquin, Assistant Attorneys General, for plaintiff Department of Civil Rights.
Starr, Bissell & Hackett (by H. James Starr) for plaintiff Cornell.
Foster, Swift, Collins & Coey, P.C. (by John L. Collins, George M. Brookover, and Frank J. Nerat, Jr.), for the defendant.
Amici Curiae:
Miller, Cohen, Martens & Sugerman, P.C. (by John A. Obee), and Richard M. Goodman, P.C. (by Susan E. Lister), for Michigan Trial Lawyers Association.
Schaden & Heldman (by Victoria C. Heldman) for Women Lawyers Association of Michigan.

Opinion:
Williams, C.J.
I. Introduction
This case presents two issues for determination by this Court which it has not previously considered. The first issue is what standard should be applied in determining whether to award back pay to a civil rights claimant under § 7(h) of the Fair Employment Practices Act, MCL 423.307(h); MSA 17.458(7)(h), where the employer refuses to permit the claimant to return to work unless she complies with a discriminatory dress code. The second issue is whether a civil rights claimant is entitled to attorney fees under the successor to the Fair Employment Practices Act, the Civil Rights Act, MCL 37.2605(2)(i), (j); MSA 3.548(605)(2)(i), (j), which specifically provides for such fees, where the charge was filed three days prior to the effective date of the Civil Rights Act and the repeal of the Fair Employment Practices Act, which does not provide for attorney fees.
We conclude that back pay should generally be awarded where there has been a finding of unlawful discrimination. Given such a finding, back pay should only be denied for reasons, which if applied generally, would not frustrate the statutory purposes of the Fair Employment Practices Act. The statutory purposes were twofold: first, to eliminate the last vestiges of discrimination, and, second, to make whole those who have suffered from discrimination. On the record before us, we find that the trial court denied back pay for reasons that would frustrate both of the above central statutory purposes.
With respect to attorney fees, we find ourselves unable to reach this issue. Claimant Cornell has precluded review by this Court inasmuch as she failed to raise the issue before the Civil Rights Commission, failed to appeal from the commission's ruling, and raised the issue before the circuit court on a different ground without any real accompanying argument.
We reverse the judgment of the Court of Appeals as to back pay, and affirm its judgment as to attorney fees.
II. Facts
Starrla K. Cornell filed a complaint with the Department of Civil Rights against Edward W. Sparrow Hospital Association on or about May 5, 1976. The department issued a charge against the hospital on March 28, 1977. Hearings were conducted before a referee on May 5, 6, 12 and 13, 1977. The hearing referee issued findings and recommendations in favor of the hospital.
On May 23, 1978, the Civil Rights Commission issued an order rejecting the findings and recommendations of the referee and adopting the opinion issued by Commissioner Paul H. Harbrecht, finding in favor of Ms. Cornell. Among other things, the claimant was awarded back pay. No mention was made of attorney fees.
Only Sparrow Hospital filed a claim of appeal in the Ingham Circuit Court on June 19, 1978. The circuit judge, reviewing the matter de novo, affirmed the ruling of the commission in all respects, except that he denied lost wages, benefits, and attorney fees. Reconsideration was denied.
Ms. Cornell and the Department of Civil Rights appealed to the Court of Appeals. In a two to one decision, the Court of Appeals affirmed the circuit court. Dep't of Civil Rights v Sparrow Hospital Ass'n, 119 Mich App 387; 326 NW2d 519 (1982). Rehearing was denied in a two to one decision. This Court denied the applications for leave filed by Ms. Cornell and the department. On reconsideration, this Court granted leave to appeal.
Starrla Cornell was employed by Sparrow Hospital as a histotechnologist from July 1, 1972 until May 3, 1976, when she was told not to report to work without complying with what was later declared to be a discriminatory dress code. The dress code required female technologists to wear a full white or pastel-colored uniform, including certain shoes, socks, underclothing, dresses, or pantsuits. In addition, female technologists were admonished to wear skirts of "respectable length" and accessories "appropriate for the situation." Male technologists, on the other hand, were permitted to wear a white laboratory coat over ordinary street clothing. The laboratory director testified that the dress code was justified because patients were used to seeing males dressed like doctors and females dressed like nurses.
The Department of Civil Rights introduced expert testimony regarding the effects of the discriminatory dress code on the female lab technicians at Sparrow Hospital. One social psychologist testified that the code reinforced negative stereotypes that females "must be told what to do," and gave them a "sense of inferiority that makes them function less effectively" in the workplace. Another social psychologist testified that requiring female lab technicians to wear a kind of uniform that implied they were of lower status than the male lab technicians increased the psychological burden on the females. Additional testimony established that the female uniform was more costly and less convenient than that required of males.
This dress code was instituted on May 1, 1976. Ms. Cornell reported to work at least twice wearing clothing inconsistent with that required for females under the code, but acceptable for male employees of her status. She was sent home on each occasion, and, as noted above, told not to return to work without proper attire in accordance with the code.
III. Back Pay
This issue involves Ms. Cornell's right to back pay, where Sparrow Hospital refused to permit her to report for work unless she wore a specific uniform only required for females. This dress code was found by the Civil Rights Commission to be violative of the Fair Employment Practices Act, MCL 423.301 et seq.; MSA 17.458(1) et seq. (repealed and superseded by the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548[101] et seq.), which, inter alia, declared it to be an unfair labor practice "[f]or any employer . . . because of the sex of any individual, to refuse to hire or otherwise to discriminate against him with respect to hire, tenure, terms, conditions or privileges of employment." MCL 423.303a(a); MSA IT^SÍSaXa). Under the Fair Employment Practices Act, where the commission determined that the respondent has engaged in an unfair employment practice:
[T]he commission shall state its findings of fact and shall issue and cause to be served on such respondent an order requiring such respondent to cease and desist from such unfair employment practice and to take such further affirmative or other action as will effectuate the purposes of this act, including, but not limited to, hiring, reinstatement or upgrading of employees with or without back pay, or admission or restoration to union membership, including a requirement for reports of the manner of compliance. Upon the submission of such reports of compliance, the commission may issue a declaratory order stating that respondent has ceased to engage in unfair employment practices. [MCL 423.307(h); MSA 17.458(7)(h). Emphasis added.]
The Civil Rights Commission in this case ordered, inter alia, that the claimant be reinstated with back pay. The circuit court reversed the award of back pay because "[t]he dress code, as instituted, does not amount to such purposeful and invidious discrimination as to prohibit the attain ment of gainful employment." The Court of Appeals affirmed that decision. We disagree and reverse.
The issue involving the back-pay provision of the Fair Employment Practices Act is one of first impression in this Court. In fact, there is little or no guiding precedent on this issue in Michigan. The federal courts, on the other hand, have had far more experience with a comparable provision of the federal Civil Rights Act of 1964, 42 USC 2000e-5(g). That provision reads:
If the court finds that the respondent has intentionally engaged in or is intentionally engaging in an unlawful employment practice charged in the complaint, the court may enjoin the respondent from engaging in such unlawful employment practice, and order such affirmative action as may be appropriate, which may include, but is not limited to, reinstatement or hiring of employees, with or without back pay (payable by the employer, employment agency, or labor organization, as the case may be, responsible for the unlawful employment practice), or any other equitable relief as the court deems appropriate. Back pay liability shall not accrue from a date more than two years prior to the filing of a charge with the Commission. Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the back pay otherwise allowable. No order of the court shall require the admission or reinstatement of an individual as a member of a union, or the hiring, reinstatement, or promotion of an individual as an employee, or the payment to him of any back pay, if such individual was refused admission, suspended, or expelled, or was refused employment or advancement or was suspended or discharged for any reason other than discrimination on account of race, color, religion, sex, or national origin or in violation of section 2000e-3(a) of this title. [Emphasis added.]
The preeminent federal case construing 42 USC 2000e-5(g) is Albemarle Paper Co v Moody, 422 US 405; 95 S Ct 2362; 45 L Ed 2d 280 (1975). Although federal case law is not binding on us here, we find the Albemarle reasoning compelling. See Civil Rights Comm v Chrysler Corp, 80 Mich App 368, 375, n 4; 263 NW2d 376 (1977).
A. Albemarle
In Albemarle, a class action was brought on behalf of present and former black employees of the Albemarle Paper Company, alleging certain violations of Title VII of the federal Civil Rights Act, with respect to the company's seniority system and its program of employment testing. One of the primary issues before the United States Supreme Court on certiorari was:
When employees or applicants for employment have lost the opportunity to earn wages because an employer has engaged in an unlawful discriminatory employment practice, what standards should a federal district court follow in deciding whether to award or deny backpay? [Albemarle, supra, p 408.]
The Albemarle Court noted that 42 USC 2000e-5(g) used the term "may" in authorizing an award of back pay, and hence concluded that any award was discretionary. Since an award of back pay is discretionary and a form of restitution, the award is also equitable in nature, see Curtis v Loether, 415 US 189, 196-197; 94 S Ct 1005; 39 L Ed 2d 260 (1974), and " 'equity eschews mechanical rules . . . [and] depends on flexibility.' " Albemarle, supra, p 417, quoting Holmberg v Armbrecht, 327 US 392, 396; 66 S Ct 582; 90 L Ed 743 (1946). Despite the discretionary/equitable nature of the award, however, the Albemarle Court opined that the author ity to grant or deny such an award was far from unlimited:
[S]uch discretionary choices are not left to a court's "inclination, but to its judgment; and its judgment is to be guided by sound legal principles." United States v Burr, 25 F Cas 30, 35 (No 14,692d) (CC Va 1807) (Marshall, C.J.). The power to award backpay was bestowed by Congress, as part of a complex legislative design directed at a historic evil of national proportions. A court must exercise this power "in light of the large objectives of the Act," Hecht Co v Bowles, 321 US 321, 331 [64 S Ct 587; 88 L Ed 754] (1944). That the court's discretion is equitable in nature, see Curtis v Loether, 415 US 189, 197 [94 S Ct 1005; 39 L Ed 2d 260] (1974), hardly means that it is unfettered by meaningful standards or shielded from thorough appellate review.
[WJhen Congress invokes the Chancellor's conscience to further transcendent legislative purposes, what is required is the principled application of standards consistent with those purposes and not "equity [which] varies like the Chancellor's foot." [Eldon, L.C., in Gee v Pritchard, 2 Swans *403, *414, 36 Eng Rep 670, 674 (1818).] Important national goals would be frustrated by a regime of discretion that "produce[d] different results for breaches of duty in situations that cannot be differentiated in policy." Moragne v States Marine Lines, 398 US 375, 405 [90 S Ct 1772; 26 L Ed 2d 339] (1970). [Albemarle, supra, pp 416-417.]
In accordance with the foregoing, the Albemarle Court held that a trial court's decision to award or deny back pay must be measured against the purposes of Title VII.
The primary purpose of Title VII was to achieve equality of employment opportunities and remove barriers that have operated to favor one identifia ble group over another. Back pay is connected with this objective because it provides a catalyst for employers to self-examine and self-evaluate their practices in an effort to eliminate discrimination. Albemarle, supra, pp 417-418.
The Court also found that Title VII embodied a "make whole" purpose, to make persons whole for injuries suffered due to unlawful employment discrimination. This "make whole" purpose was evidenced by the fact that Congress had armed the courts with full equitable powers, whose historic purpose was to " 'secure complete justice,' Brown v Swann, 10 Pet 497, 503 (1836); see also Porter v Warner Holding Co, 328 US 395, 397-398 [66 S Ct 1086; 90 L Ed 1332] (1946)." Albemarle, supra, p 418. Moreover, the Albemarle Court stated that Title VII dealt with injuries of an economic nature and that in such cases the courts should attempt to place the injured party in as near the same position the party would have occupied had this wrong not been committed. Finally, the Court noted that the "make whole" purpose was supported by the legislative history of Title VII. The back-pay provision of Title VII was modeled on the back-pay provision of the National Labor Relations Act, under which the National Labor Relations Board has consistently awarded back pay as a matter of course. The Albemarle Court stated that it must assume that Congress was aware of this fact. Albemarle, supra, pp 418-421.
Thus, the two central statutory purposes of Title VII as set forth in Albemarle are to eliminate discrimination and make persons whole for injuries suffered through discrimination. The Albemarle Court held that "given a finding of unlawful discrimination, backpay should be denied only for reasons which, if applied generally, would not frustrate the central statutory purposes . . . ." Albemarle, supra, p 421. On the basis of this standard, the Albemarle Court concluded that the employees were entitled to back pay.
B. Albemarle & Section 7(h) of the Fair Employment Practices Act
We think that the Albemarle standard should be the standard under § 7(h) of the Fair Employment Practices Act. In fact, we agree with dissenting Judge Mackenzie in the Court below that "the case for a result such as the Court reached in Albemarle is more compelling under the state statute than under the federal statute." Dep't of Civil Rights v Sparrow Hospital Ass'n, supra, p 395 (Mackenzie, J., dissenting).
The operative section of the federal Title VII reads, "the court may . . . order such affirmative action as may be appropriate, which may include . . . reinstatement . . . with or without back pay . . . ." 42 USC 2000e-5(g). Such language is clearly discretionary. Section 7(h) of the state Fair Employment Practices Act, on the other hand, reads, "the commission shall . . . take such further affirmative or other action as will effectuate the purposes of this act, including . . . reinstatement . . . with or without back pay . . . ." The "with or without" language in § 7(h) imparts some sense of discretion. However, that discretion, by the express terms of the statute, shall be exercised so as to effectuate the purposes of the act.
Furthermore, as in Albemarle, the power to award back pay was given by the Legislature as part of legislation that was directed at an historic evil. The Legislature bestowed this power on the commission to "further transcendent legislative purposes . . . ." Albemarle, supra, p 417. To permit inconsistent application of the back-pay provision would be to frustrate those purposes.
In accordance with the above discussion, we think that the decision to deny or grant back pay must be measured by the purposes of the Fair Employment Practices Act. We find that the purposes of the Fair Employment Practices Act, like Title VII, were to eradicate discrimination and to make persons whole for injuries suffered as a result of discrimination.
The purpose of eradicating discrimination is clearly stated in the act itself. At the time this action was commenced, the preamble to the Fair Employment Practices Act read in pertinent part, "An act to promote and protect the welfare of the people of this state by prevention and elimination of discriminatory employment practices and policies . . . ." Preamble, MCL 423.301 et seq.; MSA 17.458(1) et seq., as amended by 1976 PA 52 (emphasis added).
In fact, this Court has forthrightly and consistently recognized this purpose in construing the Fair Employment Practices Act and its successor the Civil Rights Act. See Boscaglia v Michigan Bell Telephone Co, 420 Mich 308, 314-316; 362 NW2d 642 (1984); Miller v C A Muer Corp, 420 Mich 355, 362-363; 362 NW2d 650 (1984); Highland Park v Fair Employment Practices Comm, 364 Mich 508, 512; 111 NW2d 797 (1961). We reiterate and emphasize that dominant purpose.
Like Title VII, a second major purpose of the act was to make whole those who suffered injury on account of discriminatory practices. As previously noted, the Albemarle Court pointed out that Title VII armed the courts "with full equitable powers . . ." and that "it is the historic purpose of equity to 'secur[e] complete justice .'" Albemarle, supra, p 418, quoting Brown v Swann, supra, p 503. This historic purpose was part of the Fair Employment Practices Act because, much the same as Title VII, the Fair Employment Practices Act bestowed upon the commission a full array of powers that were equitable in nature. See MCL 423.307; MSA 17.458(7). Albemarle, supra, p 418, quoting Brown v Swann, supra, p 503. The Fair Employment Practices Act also dealt with injuries that were largely economic in nature, and as the Court stated in Albemarle, in such situations "[t]he injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed." Albemarle, supra, pp 418-419, quoting Wicker v Hoppock, 6 Wall 94, 99; 18 L Ed 752 (1867).
In addition, § 7(h) of the Fair Employment Practices Act, like the back-pay provision of Title VII, was modeled on the corresponding National Labor Relations Act provision, Boscaglia v Michigan Bell Telephone Co, supra, p 316, n 12. See Highland Park v Fair Employment Practices Comm, supra, pp 516-517. Pursuant to that provision, the National Labor Relations Board has awarded back pay as a matter of course. Albemarle, supra, pp 419-420. We must assume that the Legislature was aware of this fact when it enacted the back-pay provision of the Fair Employment Practices Act. Albemarle, supra, pp 419-420. See 2A Sands, Sutherland Statutory Construction (4th ed), § 52.02.
We conclude that § 7(h) of the Fair Employment Practices Act had a twofold purpose, to eliminate discrimination and to make whole those who have suffered through discrimination. Thus, following a finding of unlawful discrimination, back pay should not be denied except for reasons which, if applied generally, would not defeat these two central purposes.
C. Award of Back Pay in the Instant Case
The trial court applied an incorrect standard in deciding whether to award back pay to the claimant. The trial court refused to award back pay because the dress code did not amount "to such purposeful and invidious discrimination as to prohibit the attainment of gainful employment." However, the act does not seek to eliminate only "purposeful and invidious" discrimination, but all discrimination. Therefore, the question whether the discrimination is of a purposeful or invidious nature is not controlling.
An award of back pay serves two purposes. First, it encourages employers to examine and evaluate conditions of employment with an eye toward eliminating those which have discriminatory effects. Albemarle, supra, pp 417-418, 422. This purpose is not served if back pay is awarded only against employers who "purposefully and invidi ously" impose discriminatory conditions. The unwitting discriminator is equally in need of an incentive to undergo self-evaluation.
The second purpose of the back-pay award is to compensate a claimant for economic losses suffered as a result of discriminatory practices. Such losses exist without regard to the attitude with which the employer imposes the discriminatory working conditions. Awarding back pay only for purposeful and invidious discrimination thwarts this second purpose too.
The trial court in Albemarle denied back pay for a reason similar to that employed by the circuit court in this case. The Supreme Court of the United States rejected that basis as inconsistent with the purposes of the act:
The District Court's stated grounds for denying backpay in this case must be tested against these standards. The first ground was that Albemarle's breach of Title VII had not been in "bad faith." This is not a sufficient reason for denying backpay. Where an employer has shown bad faith — by maintaining a practice which he knew to be illegal or of highly questionable legality — he can make no claims whatsoever on the Chancellor's conscience. But, under Title VII, the mere absence of bad faith simply opens the door to equity; it does not depress the scales in the employer's favor. If backpay were awardable only upon a showing of bad faith, the remedy would become a punishment for moral turpitude, rather than a compensation for workers' injuries. This would read the "make whole" purpose right out of Title VII, for a worker's injury is no less real simply because his employer did not inflict it in "bad faith." Title VII is not concerned with the employer's "good intent or absence of discriminatory intent" for "Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation." Griggs v Duke Power Co, 401 US [424,] 432 [91 S Ct 849; 28 L Ed 2d 158 (1971)]. See also Watson v City of Memphis, 373 US 526, 535 [83 S Ct 1314; 10 L Ed 2d 529] (1963); Wright v Council of City of Emporia, 407 US 451, 461-462 [92 S Ct 2196; 33 L Ed 2d 51] (1972). [Emphasis added. Albemarle, supra, pp 422-423. See Albemarle, supra, p 422, n 16; MERC v Reeths-Puffer School Dist, 391 Mich 253, 266-267; 215 NW2d 672 (1974).]
Like the United States Supreme Court, we reject the trial court's denial of back pay on the basis of the hospital's alleged "good faith." We find that denial of back pay to this claimant would defeat the central purposes of the act.
Sparrow Hospital argues that the circuit court's denial of back pay was justified because the claimant failed to mitigate her damages by continuing work at Sparrow Hospital. The hospital argues that the claimant should have mitigated her damages by complying with the discriminatory dress code while simultaneously challenging its validity. The circuit court seems to have shared this same opinion.
The hospital points out that the United States Supreme Court in Ford Motor Co v EEOC, 458 US 219, 236; 102 S Ct 3057; 73 L Ed 2d 721 (1982), held that under Title VII, the duty to mitigate requires a wronged individual to accept a subsequent offer of employment from the wrongdoing employer. What the hospital fails to note is that the Supreme Court held that although the offer of employment need not include back pay, it must otherwise be "unconditional." Here the hospital's "offer of employment" was not unconditional. Rather, it was specifically conditioned upon Ms. Cornell's compliance with an unlawful discriminatory dress code.
Furthermore, the hospital's position is wholly inconsistent with the purposes of the act. Although the claimant was justified in not complying with the unlawful discriminatory dress code, and thereby denied employment, she would not be made whole for her injuries. Likewise, the employer would not be encouraged to examine its policies with an eye toward eliminating discrimination. The hospital's position would encourage employees to comply with discriminatory practices established by employers, not encourage employers to eradicate such practices.
Ms. Cornell was ready, willing, and able to work at all times. She simply refused to comply with the unlawful discriminatory dress code. Ms. Cornell's supervisor refused to allow her to return to work unless she complied with the code, and, when she did not do so, her employment was terminated. While as a general rule, a wrongfully terminated employee seeking damages must accept employment to mitigate damages, either with a different employer or with the same employer, if the job is unconditional except as to back pay, nonetheless, where an employer refuses to allow an employee to return to work unless that employee complies with an unlawful discriminatory condition of employment, the employee has not failed to mitigate damages.
The hospital argues that the federal doctrine of constructive discharge prevents Ms. Cornell from receiving an award of back pay. Under that doctrine, an employee who voluntarily quits employment may be deemed "constructively discharged," and hence eligible for back pay only when "working conditions . . . have [become] so difficult or unpleasant that a reasonable person in the em ployee's shoes would have felt compelled to resign." Bourque v Powell Electrical Mfg Co, 617 F2d 61, 65 (CA 5, 1980), quoting Alicea Rosado v Garcia Santiago, 562 F2d 114, 119 (CA 1, 1977). Courts generally deem the fact of discrimination alone insufficient to justify voluntary quitting, in order to encourage employees to attack discriminatory working conditions within the context of a continuing employment relationship. Bourque, supra, p 66.
We are not inclined to address the question whether Ms. Cornell was constructively discharged because the facts indicate that she was actually discharged. As stated above, she was ready, willing, and able to work at all times. The findings of fact of both the hearing referee and the Civil Rights Commission included statements that the dress code was made a condition of Ms. Cornell's employment at the hospital and that Ms. Cornell "was terminated and prevented from working as the result of her failure to comply" with the requirements of the dress code. In light of the fact-finding of the administrative tribunals and lower courts, we accept the finding that the hospital discharged Ms. Cornell for refusing to comply with the discriminatory dress code. See also EEOC v Sage Realty Corp, 507 F Supp 599, 608, 613 (SD NY, 1981).
However, even under the doctrine of constructive discharge we would find Ms. Cornell eligible for back pay because a reasonable employee in her situation would have felt compelled to resign. Sparrow Hospital imposed two different dress codes on its laboratory technologists, a male dress code and a female dress code. The codes were intentionally designed to reinforce sexual stereotypes: men were dressed to look like doctors, and women were dressed to look like nurses.
Ms. Cornell complained about the discriminatory nature of the dress code to a member of the committee responsible for designing the codes and to her supervisor several times before the codes became effective. Cornell complied with the male dress code after the codes became effective. She again called her supervisor's attention to the discriminatory nature of the dress code when the supervisor called her away from her work station and sent her home to change clothes. In light of the obviously demeaning nature of the dress code and of her employer's unwillingness to reexamine its dress code, it was reasonable for Ms: Cornell not to return to work. We therefore find that under the doctrine of constructive discharge, Ms. Cornell is entitled to receive back pay.
We also reject several aspects of the minority's analysis of the constructive-discharge doctrine. The minority opinion justifies the denial of back pay under the constructive-discharge doctrine for at least two reasons. First, management's ability to manage is impaired when the threat of back pay makes it unable to enforce employment conditions which are arguably discriminatory. Second, emotional distress damages may be available to compensate the victim of discriminatory employment conditions for the period in which the illegal condition was. tolerated.
These justifications are inadequate and fundamentally undermine the intent underlying the Civil Rights Act. The minority concludes that the analysis it applies "is beneficial to both employers and employees." Post, p 584. This is because, the minority argues,
The employer cannot . be made whole retroactively. Requiring the employer . . . not [to] enforce] a rule whenever an employee considers it discriminatory . . . would impair management's ability to manage. In large plants, the result could be disruptive. Post, pp 585-586.
No evidence of such "disruption" and "serious impairment" in businesses liable for back-pay awards was produced in this case. Certainly the present case demonstrates the very opposite. Unless the very essence of management is the ability to impose discriminatory working conditions upon employees, it is difficult to imagine any harm whatsoever, let alone "disruption," Sparrow Hospital would have suffered from not introducing and enforcing its newly adopted dress code. Thus, this is not the case in which to address the problems of "disruption" and "management's ability to manage," assuming they exist.
On the other hand, the minority states, "[i]f the employee stays on despite the discriminatory condition, the employee can ordinarily be 'made whole' retroactively." Post, p 585. Yet, as the minority concedes in a footnote, post, p 585, this Court has never held that mental distress damages are recoverable for employment discrimination. Thus, in fact, the minority is relying on a remedy with which to make the employee whole which may not be available at all. Boscaglia v Michigan Bell, supra, p 316, n 13; Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401; 295 NW2d 50 (1980); Daley v LaCroix, 384 Mich 4; 179 NW2d 390 (1970).
Indeed, as the minority concedes, under its approach, unless mental distress damages are recoverable, "a worker who remains on the job would receive nothing for successfully challenging an unlawful discriminatory condition." Post, p 585. Implicit in this acknowledgment is, of course, the recognition that the employer who illegally discriminates is subject to no more than a declaratory judgment that its policy is illegal, or, at worst, to an injunction against continuing the practice. Thus, the minority's analysis removes "the spur or catalyst which causes employers . to self-examine and to self-evaluate their employment practices and to endeavor to eliminate, so far as possible, the last vestiges . . ." of discrimination, Albemarle Paper Co v Moody, supra, pp 417-418, quoting United States v NL Industries, Inc, 479 F2d 354, 379 (CA 8, 1973). Not only does the minority's analysis eliminate employers' incentives to critically evaluate their employment practices and policies — it also eliminates all incentives for employers to cease and desist from a discriminatory practice once they recognize it as being illegal. Instead, they are encouraged to wait until the declaratory judgment of illegality becomes final— and, indeed, there is no reason for them not to simply institute a "new," slightly different, policy and let the employees go through the entire court-process all over again. In fact, the minority's analysis is an incentive, an encouragement, to employers to continue to discriminate.
In addition, vulnerability to mental distress damages is far more likely to be disruptive to management than vulnerability to back-pay awards. An award of back pay is a known, relatively easily calculable dollar figure. By contrast, the award of mental distress damages will vary widely from individual to individual and, no doubt, from jury to jury. Management can calculate the financial risk of imposing an arguably discriminatory condition far more accurately when back pay, and not mental distress damages, is an available remedy.
An employee who resigns because of an arguably discriminatory condition of employment will not be assured a windfall in the form of back pay if a court later finds that the condition was illegal. The employee is always under a general duty to mitigate damages by seeking other employment, as mentioned above at footnote 5.
We conclude that the trial judge improperly overturned the commission's award of back pay.
IV. Attorney Fees
Ms. Cornell argues that attorney fees should have been awarded by the circuit court and commission under the Civil Rights Act. MCL 37.2605(2)(i), (j); MSA 3.548(605)(2)(i), (j). The claimant admits that her action was filed under the Fair Employment Practices Act before the effective date of the . Civil Rights Act, March 31, 1977. She argues, however, that the attorney fees provision of the Civil Rights Act should be held to be retroactive because it is remedial in nature. We find ourselves unable to reach the merits of the claimant's argument because she has failed to preserve the issue for review.
The Fair Employment Practices Act clearly did not provide for attorney fees, while the Civil Rights Act clearly does, MCL 37.2605(2)(i), (j); MSA 3.548(605)(2)(i), (j). Ms. Cornell filed a complaint against Sparrow Hospital under the Fair Employment Practices Act on or about May 5, 1976 with the Civil Rights Department. That department issued a charge against the hospital under the Fair Employment Practices Act on March 28, 1977. This was three days before the effective date of the Civil Rights Act.
Hearings were conducted before a referee on May 5, 6, 12 and 13, 1977, and he issued his findings and recommendations soon thereafter. These findings and recommendations were substantially rejected by the Civil Rights Commission by final order dated May 23, 1978. Only the hospital sought appeal to the circuit court on June 19, 1978.
Although the Civil Rights Act was in effect during all proceedings before the Civil Rights Commission except the actual filing of the complaint, the issue of attorney fees was never raised. In fact, the order of the commission does not even address the issue one way or the other.
Moreover, Ms. Cornell never filed an appeal from the order of the commission. Instead, she simply requested attorney fees along with her request for other relief, citing § 7(h) of the Fair Employment Practices Act. MCL 423.307(h); MSA 17.458(7)(h). No claim for attorney fees was made under the Civil Rights Act, nor did the claimant raise any issue regarding the retroactive application of the Civil Rights Act's attorney fees provision to the award of the commission. It was not until the claimant sought review in the Court of Appeals that she claimed a right to attorney fees under the Civil Rights Act.
Thus, the claimant failed to raise the issue before the commission, failed to appeal from the commission's ruling, and raised the issue before the circuit court under a different theory without any real accompanying argument. For these reasons, this issue is not reviewable on appeal. See Turner v Consumers Power Co, 376 Mich 188, 191-192; 136 NW2d 1 (1965); Odoi v White, 342 Mich 573, 577; 70 NW2d 709 (1955); Dwelley v Tom McDonnell, Inc, 334 Mich 229, 233; 54 NW2d 217 (1952).
V. Conclusion
We hold that given a finding of unlawful discrimination under the Fair Employment Practices Act, back pay should only be denied to a claimant for reasons which, if applied generally, would not frustrate the central purposes of the act. The two main purposes of the act were to eliminate discrimination and make whole those who suffered injury on account of discrimination. Denial of back pay under the facts of this case would frustrate both of these purposes.
With respect to attorney fees, Ms. Cornell has precluded review by this Court because she has failed to properly preserve the issue for appellate review.
In accordance with the foregoing, we reverse the judgment of the Court of Appeals as to back pay and affirm the judgment of that Court as to attorney fees. We remand to the circuit court for determination of the amount of back pay and mitigation.
Cavanagh and Boyle, JJ., concurred with Williams, C.J._
The comparable provision in the Civil Rights Act is MCL 37.2202(1); MSA 3.548(202)(1). The charge issued here by the Civil Rights Department was filed three days before the effective date of the Civil Rights Act and the repeal of the Fair Employment Practices Act. As such, all proceedings in this case, except for the filing of the charge, occurred after the repeal of the Fair Employment Practices Act. Nonetheless, the parties, courts and the civil rights hearing referee and commission have proceeded throughout this litigation under the Fair Employment Practices Act. We do not decide the propriety of proceeding under that act. For purposes of our discussion in this case, we note that the back pay provision of the Civil Rights Act, MCL 37.2605; MSA 3.548(605), is in all relevant respects, language, history and purpose, the same as that present in its predecessor, the Fair Employment Practices Act, MCL 423.307(h); MSA 17.458(7)(h).
As originally enacted, the preamble to the Fair Employment Practices Act read in pertinent part, "An act to promote and protect the welfare of the people of this state by prevention and elimination of discriminatory employment practices and policies . . . .''Preamble, MCL 423.301 et seq.; MSA 17.458(1) et seq. (before 1975 amendment, 1975 PA 332). (Emphasis added.) The preamble was amended in 1975 to read, "An act to promote and protect the welfare of the people of this state by prevention and elimination of unfair practices and policies in employment. . . ." Preamble, MCL 423.303 et seq.; MSA 17.458(3) et seq., as amended by 1975 PA 332. (Emphasis added.) The meaning of "unfair practices . in employment. . ." can be gleaned from the act itself which defines "unfair employment practice" throughout the act as discrimination. See MCL 423.303, 423.303a; MSA 17.458(3), 17.458(3a). In 1976, the preamble was amended to read much the same as it did originally and as it did read at the time this action was commenced, "An act to promote and protect the welfare of the people of this state by prevention and elimination of discriminatory employment practices and policies . . . ." Preamble, MCL 423.301 et seq.; MSA 17.458(1) et seq., as amended by 1976 PA 52 (emphasis added).
While, in a situation such as that present here, our ruling applies in the first instance to the award of the commission, it is equally applicable to the reviewing courts subject to the proper reviewing standard. In this light, whenever the commission or court declines to award back pay, it is necessary to articulate the reasons therefor. See Albemarle, supra, p 421, n 14.
We make no comment regarding whether or not the hospital's discriminatory dress code was purposeful or invidious.
The record discloses testimony by the plaintiff that she sought employment elsewhere in an attempt to mitigate damages. However, no finding on the question of general mitigation of damages was made below.
The circuit court's findings stated that Ms. Cornell "was sent home and told that unless she adhered to the new policy she would be terminated." The Court of Appeals opinion stated, "When Cornell refused to conform her appearance to the provisions of the dress code, she was discharged." 119 Mich App 387, 390; 326 NW2d 519 (1982).
We note that we do not have the complete record of the proceedings before the commission. However, Ms. Cornell does not deny the hospital's assertion that the issue of attorney fees was never raised. In fact, during oral argument counsel for Ms. Cornell conceded as much. Moreover, the hospital's assertion is supported by the commission's opinion which makes no mention of attorney fees.
The fact that the circuit court's review is de novo does not absolve the claimant of the responsibility to raise the issue before the commission and seek an appeal therefrom in order to preserve that issue for appellate review. See Alford v Lehman, 350 Mich 446, 457-458; 86 NW2d 330 (1957).