There are two ways that you may pay higher taxes in settling or winning your employment case. If you receive damages for noneconomic harm (also called compensatory damages) such as the pain and suffering and emotional distress that employees suffer as a result of egregious, international harassment, retaliation, or similar workplace wrongs, you will be taxed on those damages, even though those who receive noneconomic damages in other types of cases, such as personal injury cases, do not pay taxes on these cases.