Breadcrumb

  1. Inicio
  2. node
  3. Policy Guidance: A determination of the appropriateness of front pay as a remedy under the Age Discrimination in Employment Act (ADEA)

Policy Guidance: A determination of the appropriateness of front pay as a remedy under the Age Discrimination in Employment Act (ADEA)

N-915.036

October 1988

  1. SUBJECT: Policy Guidance:  A determination of the appropriateness of front pay as a remedy under the Age Discrimination in Employment Act of 1967 (ADEA).
  2. PURPOSE: This document provides guidance on the position of the federal courts on front pay as a remedy under the ADEA and sets forth the Commission's views on when an award of front pay is appropriate.
  3. EFFECTIVE DATE: Upon receipt.
  4. EXPIRATION DATE: A an exception to EEOC Order 205.001, Appendix V, Attachment 4, § a (5), this Notice will remain in effect until rescinded or superseded.
  5. ORIGINATOR: ADEA Division, Office of Legal Counsel.
  6. INSTRUCTIONS: File after § 801 of Volume II of the Compliance Manual.
  7. SUBJECT MATTER:

 

I. While there was initially some conflict in the federal courts as to whether front pay was an appropriate remedy under the ADEA, today there is essentially uniform agreement that front pay may be awarded under certain circumstances.

The remedial provisions of the ADEA, in pertinent part, provide as follows:

In any action brought to enforce this chapter the court shall have jurisdiction to grant such legal or equitable relief as may be appropriate to effectuate the purposes of this chapter, including without limitation judgments compelling employment, reinstatement or promotion, or enforcing the liability for amounts deemed to be unpaid minimum wages or unpaid overtime compensation under this section.

29 U.S.C. § 626(b).

The phrase "such legal or equitable relief as may be appropriate to effectuate the purposes of this chapter" has been construed as granting the courts broad equitable powers to make whole the victims of age discrimination by restoring them to the position they would have been in absent their employer's discriminatory conduct.[1]  See e.g., Whittlesey v. Union Carbide Corp., 742 F.2d 724, 727-28 (2d Cir. 1984); Maxfield v. Sinclair Int'l., 766 F.2d 788, 796 (3d Cir. 1985), cert. denied, 474 U.S. 1057 (1986).  Front pay, an award for future earnings,[2] is sometimes the only way in which a victim of age discrimination can be made whole.  Id.

Ordinarily, an employee can be made whole by a backpay award coupled with an order for reinstatement.  Reinstatement is generally considered to be the preferred remedy to avoid future lost earnings.  See, e.g., Goldstein v. Manhattan Indus., Inc., 758 F.2d 1435, 1448 (11th Cir.), cert. denied, 474 U.S. 1005 (1985).  Reinstatement and backpay, expressly authorized by the statute, involve the least amount of uncertainty because they effectively reestablish the prior employment relationship between the parties, as well as assuring the plaintiff of employment opportunities unimpeded by age bias.  Whittlesey, 742 F.2d at 728.

Reinstatement, however, may not always be possible.  For example, there may be no position available at the time of judgment or the relationship between the parties may be so hostile that reinstatement is impracticable.[3]  Maxfield, 766 F.2d at 796.  Denial of reinstatement in these situations, without an alternative remedy, could leave the plaintiff irreparably harmed in the future and yet permit the defendant's liability for its unlawful action to end at the time of judgment.  See Whittlesey, 742 F.2d at 796.

The Commission, in accordance with the overwhelming weight of the case law,[4] finds that under such circumstances an award of front pay may be necessary and appropriate to effectuate the remedial intent of the Act.

In fashioning a front pay award, numerous factors are taken into account, including "the discharged employee's duty to mitigate, 'the availability of employment opportunities, the period within which one by reasonable efforts may be re-employed, the employee's work and life expectancy, [and] the discount tables to determine the present value of future damages.' "  Prudential Fed., 763 F.2d at 1173 (quoting Koyen v. Consol. Edison Co., 560 F. Supp. 1161, 1168-69 (S.D.N.Y. 1983)).  While an award of future damages may involve some risk of uncertainty or speculation, the mere fact that damages may be difficult to compute should not insulate an employer who has engaged in age discrimination from providing full relief.[5]  Prudential Fed., 763 F.2d at 1173.  Moreover, district courts have had considerable experience with future damages in employment contract and personal injury cases, as well as Title VII cases, and should be able to adapt and apply this knowledge to ADEA cases.  Whittlesey, 742 F.2d at 728.

The decision whether to award front pay will always lie within the sound discretion of the trial court in accordance with the particular facts of each case.[6]  See, e.g., Cassino, 817 F.2d at 1347; Davis, 742 F.2d at 923.  The Commission believes, however, that when reinstatement is found not to be appropriate,[7] careful consideration should always be given to the possibility that an award of front pay may be necessary to ensure that the plaintiff is made whole.

The Commission concurs with the position that an express request for reinstatement is not a mandatory prerequisite for an award of front pay.  To require a plaintiff to always seek reinstatement, even when reinstatement is clearly not feasible, serves little purpose.  See Prudential Fed., 763 F.2d at 1173; Koyen, 560 F. Supp. at 1169.

Of course, an award of front pay in lieu of reinstatement does not permit a plaintiff to "sit idly by and be compensated for doing nothing."  Whittlesey, 742 F.2d at 728.  Front pay awards must be reduced by the amount plaintiff could gain through reasonable attempts at mitigation.  Cassino, 817 F.2d at 1347.  A plaintiff's duty to mitigate damages should serve as an effective control on front pay damage awards.  Id.

In a case where a plaintiff is able or should be able, with reasonable effort, to obtain other comparable employment,[8] an award of front pay is not necessary to make him whole.  Similarly, if a plaintiff unreasonably refuses an offer of reinstatement and thus fails to mitigate his damages, an award of front pay is precluded.  McNeil, 800 F.2d at 118.

As is true with a backpay award, an employer who contests a front pay award on the grounds that plaintiff has not met his duty to mitigate bears the burden of proving that plaintiff has failed to mitigate his damages.  See Coleman v. City of Omaha, 714 F.2d 804, 808 (8th Cir. 1983); Green v. USX Corp., 843 F.2d 1511, 1532 (3d Cir. 1988).

Example 1 - Plaintiff held a high-level position at a major corporation before he was forcibly retired.  Plaintiff alleged age discrimination and eventually prevailed in a lawsuit brought pursuant to the ADEA.

The district court judge found that the employer had exhibited such hostility and outrage towards plaintiff on account of his lawsuit that plaintiff would have difficulty functioning if he returned to work.[9]  Accordingly, the district court found that reinstatement would be impossible and awarded front pay in lieu of reinstatement.

The circuit court found the award of front pay from the time of the trial until age 70 (a four-year period), at which time plaintiff would have retired,[10] to be within the district court judge's discretion, noting that front pay is necessary where the factfinder can reasonably predict that the plaintiff has no reasonable prospect of obtaining comparable alternative employment.  In light of the high level of the plaintiff's position and the relatively short time until his retirement, the circuit court noted that the front pay award did not require undue speculation as to either the possibility of mitigation or the amount of salary employer would have paid plaintiff.  The circuit court concluded that to deny plaintiff compensation for the losses he would suffer over those years, particularly where the impossibility of reinstatement was the fault of employer, would be inconsistent with the purposes of the Act.

See Whittlesey, 742 F.2d at 729.

It has been questioned whether an award of front pay to a discriminatorily discharged 41-year-old employee until such time as he qualifies for a pension would ever be warranted.  See Davis, 742 F.2d at 923.  One of the implicit concerns reflected in this statement is that the longer the period for which front pay is awarded, the more speculative the damage award becomes.  While this is clearly a relevant consideration, see Whittlesey, 742 F.2d at 729, the Commission is of the opinion that a front pay award does not lend itself to a per se rule and that a case-by-case determination must be made of both the appropriateness of a front pay award, as well as the appropriate parameters of such an award.  It may be noted, however, that a 41-year-old worker would ordinarily be expected to obtain comparable alternative employment within a reasonable period of time.

Example 2 - The jury has determined that plaintiffs Smith and Jones, age 54 and 59 respectively, were terminated because of their age in violation of the ADEA.  In attempting to determine an appropriate remedy to make the plaintiffs whole, the court found that the plaintiffs could not be restored to their prior positions with Employer because the division in which they worked had been sold.  The court also noted that even if comparable positions could be found elsewhere in Employer's organization, it would hesitate to order reinstatement because of the hostile relations between the parties.

While commenting that plaintiff Jones had not been offered a position in the factoring industry commensurate with his income and responsibilities with Employer, the court nonetheless concluded that this did not mean that Jones lacked opportunities to engage in comparable alternative employment.  The court found that Jones had started his own consulting firm and that the firm's gross earnings had been increasing from year to year.  The court concluded that Jones' success in the short term in setting up a consulting business in the factoring field negated the argument that Jones should receive front pay because he has no reasonable prospects for engaging in comparable employment.

The court found that plaintiff Smith had found comparable, although not identical, employment with another company in the industry.  The court noted that while Smith's starting salary with his new employer was somewhat less than what he had previously been earning, Smith had received several moderate pay increases and currently received many of the fringe benefits he had previously enjoyed at his former employ.

The court then indicated that even if it was persuaded that some award of front pay was necessary to make the plaintiffs whole, it would hesitate to grant plaintiffs the amount of front pay sought because of the amount of speculation that would enter into the court's calculations for the respective periods of eleven and sixteen years until each plaintiff would have retired at age 70 (prior to removal of ADEA's age 70 cap).

The court ultimately declined to award front pay to either plaintiff, based on its appraisal of their respective employment opportunities (and the resulting impression that front pay was not really required to make them whole), as well as the periods of front pay sought and the speculative projections that such front pay awards would require.

See Bonura, 629 F. Supp. at 362 n.3.

Example 3 - Plaintiff, age 49, was found to have been discharged in violation of the ADEA.  Reinstatement was deemed to be inappropriate because the employment relationship was found to be irreparably damaged.

The court awarded plaintiff front pay based on the approximate difference between the salary plaintiff was earning in his new job and the salary he had been paid by employer before his discharge (an annual amount of $17,000) for a period of two years, noting that two years was a reasonable amount of time for plaintiff to find employment comparable to his previous job.

See Dominic, 822 F.2d at 1257-58.

While the plaintiff must present competent evidence demonstrating future damages, the Commission agrees with the decisions holding that expert testimony is not an absolute prerequisite to a determination of the issue of future lost earnings and benefits[11] and their reduction to present value.  See Cassino, 817 F.2d at 1347-48; Maxfield, 766 F.2d at 797.  Furthermore, absent evidence to the contrary, it should be assumed that the illegally discharged employee would have continued working for the employer until retirement.  See Gibson, 695 F.2d at 1101 n.8.

If the employer contends that the plaintiff's job would have been eliminated prior to retirement, for example, as the result of a reduction-in-force, the employer has the burden of establishing that the plaintiff would not have been retained in some other capacity.  Archambault v. United Computing Sys., Inc., 786 F.2d 1507, 1514-15 (11th Cir. 1986).  But see Gibson, 695 F.2d at 1100 n.7 (where employer articulated a legitimate nondiscriminatory reason why plaintiff's damages should be cut off as of a certain date, that is, the plant closed, plaintiff has the burden of proving that he would have been transferred to another position within the company).

Example 4 - A jury determined that plaintiff, a 57-year-old chemist, had been terminated because of his age in violation of the ADEA. The court determined that reinstatement was not feasible because no job was available as a result of a reduction in employer's work force[12] and that front pay must be awarded to make the plaintiff whole for future expected losses.

The jury, after being instructed as to the applicable law, found that the "future wages" element of a front pay award was totally offset by the plaintiff's new salary, which was slightly higher than what he had earned in his former job.  However, the jury found that another element of future damages, deferred compensation in the form of pension benefits, was not offset by plaintiff's new salary or any deferred compensation plan offered by his new employer.  The jury awarded front pay based upon the amount of lost pension benefits established by the testimony of plaintiff's expert witness.

On appeal, the reviewing court affirmed the jury's award, noting that while this future damage equation assumed that plaintiff would have remained with the employer until his 65th birthday (plaintiff had testified that he planned to retire at age 65), a period of eight years, the assumption did not require unreasonable speculation.  The court commented that an employee illegally discharged near the end of his working career is particularly vulnerable to economic injury in the form of lost pension benefits since even if he secures subsequent employment, he may be unable to work the number of years that are required for vesting under the new employer's pension plan.

See Blum, 829 F.2d 367.

While some courts have indicated that front pay may be less appropriate when liquidated damages are available, see, e.g., McNeil, 800 F.2d at 118, the Commission does not agree with this position.  An ADEA recovery consists of two categories:  "items of pecuniary or economic loss such as wages and job-related benefits; and liquidated damages, calculated as an amount equal to the pecuniary loss, which compensate the aggrieved party for non-pecuniary losses arising out of a willful violation of the Act."  B. Schlei and P. Grossman, Employment Discrimination Law 495 (2d ed. 1983).  If a court, in its discretion, concludes that the plaintiff is entitled to compensation for future financial losses, an award for non-pecuniary losses is not a substitute for such compensation.  It follows that liquidated damages are not intended to take the place of equitable relief.  Dickerson, 703 F.2d at 280.

II. Case Resolution

During the conciliation of an ADEA charge for which a cause determination has issued, reinstatement to the position the charging party would have occupied absent discrimination, or a substantially comparable position, and backpay are the preferred remedies to make the charging party whole.  If it is determined, however, that reinstatement is realistically not possible, front pay may be considered as an alternative remedy to make the charging party whole.

 

 

 

DATE: October 25, 1988                                               APPROVED: ______________________

                                                                                                            Clarence Thomas
                                                                                                            Chairman

 

    [1] Earlier decisions sometimes interpreted the remedial provisions of the ADEA as permitting only the specifically incorporated Fair Labor Standards Act remedies of backpay and reinstatement.  See, e.q., Ginsberg v. Burlington Indus., Inc., 500 F. Supp. 696, 700-01 (S.D.N.Y. 1980).  This narrow interpretation is now widely rejected.  See, e.g., Whittlesey v. Union Carbide Corp., 742 F.2d 724 (2d Cir. 1984).

    [2] In other words, front pay is monetary relief for any future loss of earnings resulting from past discrimination. 1 Emp. Prac. Guide (CCH) ¶ 2615.12 (1985).

    [3] While the case law does not generally address who has the burden of establishing that reinstatement is not feasible, as a practical matter, the burden would appear to fall on whichever party opposes the preferred remedy of reinstatement.

    [4] See Wildman v. Lerner Stores Corp., 771 F.2d 605, 616 (1st Cir. 1985) (the district court has discretion to award front pay if reinstatement is impracticable or impossible); Whittlesey v. Union Carbide Corp., 742 F.2d 724, 728 (2d Cir. 1984) (front pay is an appropriate remedy in limited circumstances when reinstatement not possible); Maxfield v. Sinclair Int'l., 766 F.2d 788, 796 (3d Cir. 1985) (front pay available if reinstatement not feasible); Pecker v. Heckler, 801 F.2d 709, 713 n.8 (4th Cir. 1986) (cites to Spagnuolo v. Whirlpool Corp., 717 F.2d 114 (4th Cir. 1983), an ADEA case, for the proposition that prior cases have embraced the concept of front pay as part of a make whole remedy for employment discrimination); Smith v. Office of Personnel Management , 778 F.2d 258, 262-63 n.2 (5th Cir. 1985), cert. denied, 476 U.S. 1105 (1986) (dicta in federal sector case indicating that front pay may be an appropriate remedy under the ADEA); Davis v. Combustion Eng'g, Inc., 742 F.2d 916, 923 (6th Cir. 1984) (front pay is a remedy available to the trial court for use, in its discretion, in fashioning make whole relief); McNeil v. Economics Laboratory, Inc., 800 F.2d 111, 118 (7th Cir. 1986), cert. denied, 107 S. Ct. 1983 (1987) (when reinstatement is infeasible or inappropriate, front pay, depending on the circumstances of the case, may be appropriate to make the plaintiff whole); Gibson v. Mohawk Rubber Co., 695 F.2d 1093, 1100 (8th Cir. 1982) (the district court may grant equitable relief, including, inter alia, reinstatement and monetary damages in lieu of reinstatement); Cassino v. Reichhold Chem., Inc., 817 F.2d 1338, 1346 (9th Cir. 1987), cert. denied, 108 S. Ct. 785 (1988) (when reinstatement is not feasible, an award of future damages or "front pay" furthers the remedial goals of the ADEA); EEOC v. Prudential Fed. Sav. and Loan Ass'n, 763 F.2d 1166, 1172-73 (10th Cir.), cert. denied, 474 U.S. 946 (1985) (while reinstatement is the preferred remedy, future damages may be awarded when reinstatement is inappropriate); Goldstein v. Manhattan Indus., Inc., 758 F.2d 1435, 1448-49 (11th Cir. 1985) (front pay may be an appropriate remedy in an age discrimination suit when reinstatement would be impracticable or inadequate); Endres v. Helms, 617 F. Supp. 1260, 1268-69 (D.D.C. 1985) (federal sector case where court indicated willingness to consider front pay in lieu of reinstatement).

    [5] While a periodic payment system under which the plaintiff's award would be re-evaluated at periodic intervals to take into account any changes in his employment status would greatly reduce the speculation inherent in lump sum awards, the general practice in most cases involving future damages has been to award the plaintiff a lump sum payment based on the discounted value of plaintiff's expected earnings less a mitigation factor.  See Note, Front Pay: A Necessary Alternative to Reinstatement Under the Age Discrimination in Employment Act , 53 Fordham L. Rev. 579, 609 (1984). Arguably, long-term judicial supervision of future damage awards could seriously burden the already crowded dockets of many courts. Id.  Moreover, the burden of such continuing litigation may fall more heavily on plaintiffs, who might have difficulty in obtaining counsel to maintain their awards, than defendant employers who are more likely to have regular counsel.  Id.

    [6] While certain courts have indicated that the amount of any front pay award is a factual question for the jury, see, e.g., Maxfield, 766 F.2d at 796; Cassino, 817 F.2d at 1347, the Second Circuit has held that the amount of a front pay award is also within the equitable discretion of the trial judge.  Dominic v. Consol. Edison Co., 822 F.2d 1249, 1257-58 (2d Cir. 1987).

    [7] Of course, if reinstatement is considered appropriate, but cannot be immediately effected, front pay may be awarded until such time as reinstatement occurs.  See High v. Economics Laboratory, Inc., 576 F. Supp. 1364 (W.D.N.C. 1983).

    [8] It should be noted that comparable does not necessarily mean identical.  See Bonura v. Chase Manhattan Bank, 629 F. Supp. 353, 362 n.3 (S.D.N.Y. 1986).  However, the Commission takes the position that a plaintiff required to mitigate his future damages need not seek employment which is not consistent with his skills, background and experience.  Cf. Dickerson v. Deluxe Check Printers, Inc., 703 F.2d 276, 282-83 (8th Cir. 1983) (discussion of mitigation in the context of backpay).

    [9] In general, the friction arising from the litigation process itself is not a sufficient reason to deny reinstatement. Dickerson, 703 F.2d at 281.  However, hostility so extreme as to make reinstatement an unrealistic alternative may sometimes arise during the course of litigation.

    [10] Prior to the lifting of the age 70 cap, courts would not extend a front pay award beyond age 70 since compulsory retirement could be imposed at that time.  See Whittlesey, 742 F.2d at 729.  Since the protections of the Act now extend to all individuals age 40 and older, age 70 can no longer be used as an automatic cut-off point.  A determination as to when the plaintiff would have retired or otherwise ceased working for the employer would need to be made on a case-by-case basis.

    [11] In determining a front pay award, the Commission believes that in addition to lost earnings, the entire employee benefit package should be considered, including, inter alia, pension, health and life insurance benefits.  See Blum v. Witco Chem. Corp., 829 F.2d 367, 374 (3d Cir. 1987) (pension benefits are an integral part of an employee's compensation package); Nordquist v. Uddeholm Corp., 615 F. Supp. 1191, 1204 (D. Conn. 1985) (entire employment benefit package considered in front pay award).

    [12] At the remedy stage of the trial, the employer presumably could not establish that plaintiff would have been terminated during the reduction-in-force absent the discriminatory motive.  Nonetheless, where numerous job positions were eliminated and, as a result, there are no available openings, reinstatement may not be possible.