EMPLOYERS MUST PROVIDE ANTIDISCRIMINATION TRAINING TO AVOID PUNITIVE DAMAGES LIABILITY

by Phil Young

This past summer, the United States Supreme Court held that employers which undertake good faith efforts to comply with federal anti-discrimination laws are not vicariously liable for punitive damages assessed on individual supervisors. Unfortunately, the Court’s opinion in Kolstad v. American Dental Association provided no definitive standard for determining good faith compliance. The Tenth Circuit Court of Appeals has recently provided additional guidance for employers seeking to use this new defense. In this first appellate court decision interpreting Kolstad, the Tenth Circuit held that merely having an anti-discrimination policy is not enough. Rather, employee training is also necessary.

In EEOC v. Wal-Mart, a hearing-impaired employee refused to attend a training session which he could not understand without the aid of an interpreter. He was subsequently transferred to a janitorial position, was suspended when he objected to the perceived demotion, and was eventually terminated. He sued under the Americans with Disabilities Act ("ADA"). Wal-Mart tried to avoid liability for punitive damages by pointing to its anti-discrimination policy, its generalized policy of equality and respect for the individual, and its ADA handbook.

The Court of Appeals was more impressed, however, with Wal-Mart’s failure to educate its employees, especially its supervisors, on the requirements of the ADA, and on how to prevent discrimination in the workforce. The evidence was that the offending supervisor, who was also responsible for training at the store where the plaintiff worked, had received no training on employment discrimination or on the requirements of the ADA; she had never discussed the ADA with any employees under her supervision and did not even have a copy of Wal-Mart’s ADA handbook. Apparently, the Court believed that Wal-Mart did not practice what it preached; did not make good faith efforts to comply with federal anti-discrimination laws; and thus could not avoid liability for punitive damages.

EEOC v. Wal-Mart is very instructive. It teaches that anti-discrimination policies are not enough to sufficiently protect an employer from liability for punitive damages. An employer seeking to benefit from the Supreme Court’s new defense must educate and train all of its employees and supervisors on the substance of federal anti-discrimination laws. Mere reliance on an anti-discrimination policy alone will leave an employer vulnerable to punitive damages.

©Moss & Barnett, A Professional Association