Opinion ID: 2774672
Heading Depth: 2
Heading Rank: 2

Heading: Tax Component Award

Text: As discussed, Appellants challenge the district court’s award to Miller of $6,495 to offset the tax burden he shall carry as a result of his lump-sum back-pay award. Although other circuits have examined these awards, see, e.g., Eshelman v. Agere Sys., 554 F.3d 426, 441 (3d Cir. 2009) (“[A]n award to compensate a prevailing employee for her increased tax burden as a result of a lump sum award will, in the appropriate case, help to make a victim whole.”); Sears v. Atchison, Topeka & Santa Fe Ry. Co., 749 F.2d 1451, 1456 (10th Cir. 1984) (upholding award of tax component to back pay given a district court’s “wide discretion in fashioning remedies to make victims of discrimination whole”), this case presents our first occasion to do so. Today, we join the Third and Tenth Circuits in affirming a tax-component award in the Title VII context. Upon Miller’s receipt of the $43,300.50 in back pay, taxable as wages in the year received, see IRS Pub. No. 957 (Rev. Jan. 2013), available at www.irs.gov/pub/irs-pdf/p957.pdf, Miller will be bumped into a higher tax bracket. The resulting tax increase, which would not have occurred had he received the pay on a regular, scheduled basis, will then decrease the sum total he should have received had he not been unlawfully terminated No. 14-1660 11 by Hospitality. Put simply, without the tax-component award, he will not be made whole, a result that offends Title VII’s remedial scheme. See Williams v. Pharmacia, Inc., 137 F.3d 944, 952 (7th Cir. 1998) (“We have noted previously that ‘the remedial scheme in Title VII is designed to make the plaintiff whole.’” (quoting McKnight v. General Motors Corp., 908 F.2d 104, 116 (7th Cir. 1990))). To be sure, the district court should have told us how it arrived at the fifteen percent figure amounting to $6,495. Silence on the issue tends to frustrate appellate review, and it would be wise for district courts to show their work if and when they adjudge similar tax-component awards in the future. 2 Eshelman, 554 F.3d at 443 (emphasizing district courts should adjudge tax-component remedies in the discrimination context based on “circumstances peculiar to the case”). Nevertheless, in this case, the district court did not abuse its wide discretion in granting this modest, equitable remedy.