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Rules on Punitive Damages in Discrimination Cases

Standard of proof--malice or reckless indifference; no egregious actions required.

Knowledge required--knowledge by the employer that it may be acting in violation of federal law.

Defenses to knowledge--unaware of the relevant federal prohibition, distinct belief that the discrimination is lawful, novel theory of discrimination, poorly recognized discrimination, or reasonable belief that the discrimination satisfies a bona fide occupational qualification (BFOQ).

Vicarious liability for punitive damages

1.            Employer liable for punitive damages for acts of agents acting in a managerial capacity.

2.            Employer liability for punitive damages for acts of co-workers--issue not addressed but Restatement of Agency is referred to by the Court. See also the decisions of the Supreme Court on liability of an employer for sexual harassment by co-workers.

Defense to vicarious liability--discriminatory decisions are contrary to the employer's good faith efforts to comply with Title VII. (Extends good faith defense from co-workers engaging in sexual harassment to managers for punitive damages only.)

Evidence--Punitive damages are based solely on an employer's state of mind. An employer can offer evidence of good faith efforts to comply with Title VII and the employee can discover the employer's good faith efforts. Evidence of good faith efforts to comply with Title VII includes the adoption of anti-discrimination policies, effective complaint procedures, and education of personnel to policies and procedures.

Kolstad V. American Dental Assn., 527 U.S.526,119 S.Ct. 2118 (1999)


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