Opinion ID: 1253110
Heading Depth: 2
Heading Rank: 5

Heading: Size of Employer for Purposes of the Damages Limitation

Text: ¶ 71. The final issue presented is a question of whether the size of an employer for purposes of the 42 U.S.C. § 1981a(b)(3) damages cap should be measured at the time the discrimination occurs, or at the time the award is made. ¶ 72. The damages cap was enacted in the Civil Rights Act of 1991, so that the amount of compensatory and punitive damages awarded in Title VII cases would be dependent on the size of the company guilty of discrimination. Hennessy v. Penril Datacomm Networks, Inc., 69 F.3d 1344, 1354 (7th Cir. 1995). The bigger the company, the more it pays. Id. ¶ 73. It is undisputed that Douglas County had more than 500 employees from 1981, when the sexual harassment and discrimination against Salveson began, until 1993, but fewer than 500 from 1994 until 1998, when Salveson was awarded damages. ¶ 74. The question for the court concerns the effect of 42 U.S.C. § 1981a(b)(3), which limits the sum of the amount of compensatory damages awarded...and the amount of punitive damages awarded to: (C) in the case of a respondent who has more than 200 and fewer than 501 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $200,000; and (D) in the case of a respondent who has more than 500 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $300,000. ¶ 75. The County asserts that the number of employees should be determined at the time damages are awarded, so that paragraph (C) applies to limit the amount of punitive and compensatory damages to $200,000. Salveson replies that the number of employees should be determined at the time the discrimination occurs, so that paragraph (D) applies to limit damages to $300,000. ¶ 76. The circuit court determined that the only reasonable interpretation of this statute is that `current or preceding calendar year' applies to the time when the discrimination or harassment occurred. The court of appeals cited 42 U.S.C. § 2000e(b), under which Title VII applies only to employers with fifteen or more employees for each working day of each of 20 or more calendar weeks in the current or preceding year. Salveson, 234 Wis. 2d 413, ¶ 39. It noted that federal courts interpret this parallel statute to apply to the year of discrimination, not the year of award, id., and concluded that Congress did not intend for courts to determine the applicability of Title VII based on the year of the discrimination, and then to apply the damages limitation based on the year it awarded damages. Id. at ¶ 40. ¶ 77. The County claims that the statutory language is clear and unambiguous, referencing the time of the award, not the time of the harassment. It asserts that since no award is given at the time of the discrimination, the term current or preceding year must refer to the time the award is given. The County distinguishes the reference to current year in this statute from identical language in 42 U.S.C. § 2000e(b), stating that § 2000e(b) relates to coverage, not to awards. It cites no precedent supporting its position, but stresses that public policy would best be served if companies with more employees face a larger damages cap, than that faced by companies with fewer employees. ¶ 78. The Fifth Circuit Court of Appeals addressed this issue in Vance v. Union Planters Corp., determining that current year in 42 U.S.C § 1981a(b)(3) refers to the year the discrimination took place, not to the year damages are awarded. 209 F.3d 438, 446 (5th Cir. 2000). ¶ 79. In Vance, the employer argued that current year refers to the year the discrimination occurred, while the victim contended that current year refers to the year the award was given. Id. The district court agreed with the victim that current year means the year damages are awarded. Id. The Fifth Circuit reversed, stating that sound policy analysis supports its reading of the statute. Id. The best reason to use `the year of occurrence' is that any other interpretation allows parties to engage in gamesmanship by structuring companies, or timing the progress of lawsuits, to maximize gain or to minimize loss. Id. The court also stated that part of the reason that the damages cap allows greater damages for larger employers is that those employers are better able to prevent discrimination by use of specially trained human-resource personnel. Id. ¶ 80. While the Fifth Circuit is the only federal circuit to specifically decide this issue, the Seventh Circuit has implicitly determined that current year means the year of the discrimination. In Hennessy, the employee was terminated from her position on April 7, 1992. 69 F.3d at 1348. The employee's case was heard in 1994, and damages were awarded. Id. at 1347, 1349. Under the County's interpretation of the statute, the relevant time period for determining number of employees would be the year of the award (1994) and the preceding calendar year (1993). However, the Seventh Circuit determined that damages were limited pursuant to 42 U.S.C. § 1981a(b)(3) based on the number of employees in April 1992, when the discrimination occurred. Id. at 1354-55. The court therefore implicitly interpreted 42 U.S.C. § 1981a(b)(3) as applicable to the year the discrimination occurred and the preceding calendar year. [16] ¶ 81. Our research has revealed no case, and the County has cited no case, in which a court has either implicitly or explicitly interpreted current year in 42 U.S.C. § 1981a(b)(3) as referring to the year in which the award was given. We are not convinced that Congress intended current year to refer to the time the discrimination occurs in 42 U.S.C. § 2000e(b), but to the year the award is given in § 1981a(b)(3). We agree with the court of appeals in this case, and the Fifth Circuit in Vance, that applying the damages cap at the time damages are awarded could lead to manipulation of the number of employees and the timing of a lawsuit to alter the amount of damages for which an employer may be liable. Salveson, 234 Wis. 2d 413, ¶ 40 n.20; Vance, 209 F.3d at 446. [30, 31] ¶ 82. We conclude that the size of the employer for purposes of the 42 U.S.C. § 1981a(b)(3) damages cap must be measured at the time the discrimination occurs. The discrimination in this case occurred from 1981 until 1995. The parties agree that Douglas County had more than 500 employees for each of 20 or more weeks in 1991, 1992, and 1993. We conclude that the circuit court therefore properly determined that Douglas County was an employer with more than 500 employees, and correctly limited compensatory and punitive damages to $300,000, pursuant to 42 U.S.C. § 1981a(b)(3).