Can an employer be held personally liable for employment discrimination against an employee? Conflicting rulings from the courts have yet to fully resolve this issue, but the number of cases absolving employers of individual responsibility suggests that employers will not be held personally liable under the law.
According to the most recent court decision on this issue, rendered by the U.S. Court of Appeals for the Seventh Circuit, an individual employer cannot be held personally liable in discrimination cases under the Americans with Disabilities Act (ADA). Previous to the appellate court decision, the issue of personal liability, one which is not exclusive to the ADA, had been decided differently by various district courts within the seventh circuit.
Five other circuit courts have addressed individual liability under other federal antidiscrimination acts: Title VII of the Civil Rights Act and the Age Discrimination in Employment Act (ADEA). Four of the circuits have rejected individual liability trader these acts trod one has recognized it.
The ADEA and the Civil Rights Act are relevant to this issue because their definitions of the term "employer" closely mirror that of the ADA. Under the ADA, an employer is "a person engaged in industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar years, and any agent of such person."
In U.S. Equal Employment Opportunity Commission and Wessel v. AIC Security Investigations, Ltd., and Ruth Vrdolyak, 55 F.3d 1276 (7th Cir. 1995), the circuit court held that although the employing entity was liable for discrimination under the ADA, the individual employer, Ruth Vrdolyak, was not. This opinion reversed the decision of the district court, which had agreed with the Equal Employment Opportunity Commission's (EEOC) argument that both AIC Security and Vrdolyak, who owned the company, were liable for discrimination under the ADA.
Charles Wessel, who had terminal cancer, was discharged by Vrdolyak - allegedly when she learned of his illness. As a result, Wessel filed a complaint with the EEOC, and in November of 1992, the EEOC filed suit against AIC and Vrdolyak, alleging violation of the ADA.
The jury, at the district court level, awarded the plaintiff $572,000, $250,000 of which was punitive damages against each defendant. Ultimately, the district court reduced the total award of punitive damages to $75,000 each for Vrdolyak and AIC, thus holding that there can be individual liability under the ADA. Defendants appealed this decision.
In holding for the appellants, the court of appeals relied upon the fact that four of five circuits have rejected individual liability under the Civil Rights Act and the ADEA. Finding such decisions persuasive, the seventh circuit rejected plaintiff's claim of individual liability against Vrdolyak. The court stated that the ADA's definition of employer is specifically limited to companies with fifteen or more employees. Such a limit exists, says the court, because Congress wished to establish "a balance between the goal of stamping out all discrimination and the goal of protecting small entities from the hardship of litigating discrimination claims." The court reasoned that since Congress wished to protect small entities because of their limited resources, it would have intended to protect individual employers from civil liability.
Additionally, the court noted that the Civil Rights Act of 1991 caps the total amount of compensatory and punitive damages that can be awarded under the ADA and Title VII. The sliding scale applies the lowest cap to companies with between 15 and 100 employees. Since there are no caps for individuals, the court reasoned that, again, Congress's intentions were clear - individual employees cannot be liable in discrimination cases.
The court also noted that the …