Academic journal article Journal of Small Business Management

The Civil Rights Act of 1991: What Every Small Business Needs to Know

Academic journal article Journal of Small Business Management

The Civil Rights Act of 1991: What Every Small Business Needs to Know

Article excerpt

The passage of the Civil Rights Act of 1991, which significantly modifies the Civil Rights Act of 1964, is likely to dramatically increase the number of lawsuits and the size of judgments in lawsuits alleging employment discrimination. This may happen because of provisions in the 1991 act that make a jury trial available, increase the amount of potential damages recoverable, and expand employment discrimination laws to employees of domestic businesses employed outside the United States.(1)

Because these changes can have a significant impact on business, especially small businesses, owners and managers need to be aware of the changes in the federal discrimination laws so appropriate steps can be taken to implement policies and procedures that will minimize potential liability.

This article examines the aspects of the new law that are most likely to have significant impact on business and offers some suggestions on steps that businesses, particularly small and medium-sized businesses,(2) can take to reduce the likelihood of successful litigation.

Damages and Jury Trials in Intentional Discrimination Cases

The new law raises the stakes for intentional employment discrimination. Under the Civil Rights Act of 1964, the remedies generally available were limited to injunctions, back pay with a maximum of two years, and reasonable attorney fees. The Civil Rights Act of 1991 adds compensatory and punitive damages and expert witness fees to this list. It also provides for jury trials. Consequently, employers can anticipate more litigation and higher awards. This may be particularly true for small businesses, because there is now an increased incentive to bring employment discrimination actions against smaller employers. Additionally, such businesses may not have the luxury of readily available legal assistance to help prevent or defend such actions.

In cases of intentional discrimination--which would include most discrimination actions--employers are now liable for compensatory damages. In addition, when an employer has "engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual," punitive damages are now available (Civil Rights Act 1991). The "reckless indifference" requirement should be relatively easy to establish if there has been employment discrimination.

The new law does limit an employer's exposure for punitive and compensatory damages for future pecuniary loss(3) and nonpecuniary losses such as emotional pain, suffering, inconvenience, mental anguish, and loss of enjoyment of life, based upon the relative size of the business. For each complainant, these damages may not exceed:

(1) $50,000 for businesses with 15 to

100 employees,

(2) $100,000 for businesses with 101

to 200 employees,

(3) $200,000 for businesses with 201

to 500 employees, and

(4) $300,000 for business with more

than 500 employees.

It should be clearly noted that other damages--back pay, attorney fees, and expert witness fees--are in addition to these limitations.

Expert witness fees are expressly provided for in the 1991 law. A court may award expert fees as part of the attorney fees. Although this provision may seem insignificant, the use of experts in preparing and presenting a case should increase the complaining party's likelihood of success and willingness to initiate litigation.

Jury trials will now be available in federal employment discrimination actions. The 1991 law specifically provides that when the complaining party seeks compensatory or punitive damages, "any party may demand a trial by jury" (Civil Rights Act 1991). Realistically, virtually all complaints alleging unlawful intentional discrimination will ask for compensatory and punitive damages and demand a jury trial. …

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