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Legislation Poised to Allow Employees to Recover Up to $300,000 in Compensatory and Punitive Damages Under the Wisconsin Fair Employment Act

Labor & Employment Alert Sean M. Scullen

The Wisconsin Legislature recently passed 2009 Senate Bill 20 ("SB-20"), which would significantly expand the damages available under the Wisconsin Fair Employment Act ("WFEA") as well as alter the procedures by which damages are recovered. Despite opposition from employers, Governor Doyle supports the bill and is expected to sign it within the coming weeks. Assuming it is enacted, SB-20 will amend the WFEA to allow employees to file an action in circuit court seeking compensatory and punitive damages of up to $300,000, depending on the size of the employer.

Under current law, complaints under the WFEA are filed with the Department of Workforce Development's Equal Rights Division ("ERD") and are initially heard by an administrative law judge ("ALJ"). The decision of the ALJ can be appealed to the Labor and Industry Review Commission ("LIRC"), which is authorized to make its own findings regarding liability and remedies based on the evidence introduced before the ALJ. Remedies under the WFEA are presently limited to recovery of back pay, potential front pay, reinstatement and attorneys' fees. Decisions by LIRC may be appealed to circuit court and thereafter to the Wisconsin Court of Appeals and the Wisconsin Supreme Court.

The pending legislation would alter the procedures under the WFEA by providing a prevailing employee with the right to file an action in circuit court for compensatory and punitive damages within 60 days after the final agency decision finding liability. Compensatory damages include compensation for pain and suffering and emotional distress. Punitive damages will be available upon a showing that the employer acted maliciously or that it intentionally disregarded the employee's rights. Further, as part of proving the appropriate amount of punitive damage, the employee will be allowed to "introduce evidence of the wealth of a defendant." SB-20 also provides that employees will have the ability to elect to have the court or a jury decide the amount of these additional damages, if any, subject to the following capped amounts, which vary according to the size of the employer: 

  • The bill will not apply to employers with fewer than 15 employees (or local governmental units).

  • For employers with between 15 and 100 workers, compensatory/punitive damages are capped at $50,000.
  • For employers with 101 to 200 employees, compensatory/punitive damages are capped at $100,000.
  • For employers with between 201 and 500 employees, compensatory/punitive damages are capped at $200,000.
  • For employers with 501 or more employees, compensatory/punitive damages are capped at $300,000.

The foregoing caps parallel those defined under several federal civil rights statutes. Unlike the caps under federal law, however, SB-20 provides that the state caps are to be adjusted yearly to reflect changes in the Consumer Price Index. Further, the WFEA is broader than federal law with regard to the types of discrimination prohibited (e.g., arrest and conviction record, sexual orientation, etc.).

The expanded remedies and ability of employees to have a jury decide them is likely to result in an increase in the number of claims pursued under the WFEA, as well as to significantly increase the cost of litigating and resolving such claims. Indeed, many employees who previously would have pursued claims under federal law for the prospect of greater damages are likely to pursue their claims under the WFEA, where the substantive law and procedures are more favorable to employees.

As previously noted, SB-20 is likely to be enacted shortly, but it will not be applied retroactively. Rather, employees will only be able to pursue claims for compensatory and punitive damages for acts of discrimination occurring after the effective date of SB-20, which is anticipated to be no sooner than June. We will provide updates regarding SB-20, including the planned effective date, as the information becomes available. In the meantime, if you have any questions regarding the changes to the WFEA proposed by SB-20, please contact Sean Scullen at 414-277-5421 / or your regular Quarles and Brady attorney.