What The EEOC’s $125 Million Verdict Against Walmart Tells Us
When it comes to enforcing federal employment anti-discrimination laws, the U.S. Equal Employment Opportunity Commission (EEOC) is primarily responsible. Much of this enforcement takes place administratively by accepting and investigating worker complaints. The EEOC also works with employees and employers to facilitate agreements that will resolve their disputes.
If no agreement can be reached, what typically happens is that the EEOC will give the employee a Notice of Right to Sue. This gives the individual the right to sue the employer themselves. But on rare occasion, the EEOC will sue the employer in federal court on the employee’s behalf.
Why the EEOC Will Sometimes Sue Employers
The chances that the EEOC will sue an employer for alleged workplace discrimination are very small. But this doesn’t mean the EEOC believes many of the complaints they receive are meritless. While the chances of winning play a key role in the EEOC’s decision to file suit, other important considerations factor in the EEOC’s decision to litigate. Some of these factors include:
- The existence of a legal issue that the EEOC wants the court to resolve.
- The impact the lawsuit could have in reducing workplace discrimination.
- The availability of the EEOC’s resources for litigation.
One possible motivation of the EEOC to bring suit stems from the desire to send employers a message about the discrimination that occurs in their workplaces. This might very well explain the EEOC’s recent big win against Walmart regarding allegations of discrimination against a disabled employee.
EEOC v. Walmart
According to court documents, in 1999, Marlo Spaeth (Spaeth) began working for Walmart as a part-time Sales Associate. Spaeth was born with Down Syndrome and she struggled with adjusting to changes in her routine, had learning difficulties and was unable to drive.
When Spaeth started working for Walmart, she could only work certain afternoon hours and only on specific weekdays. One of the reasons for this unique schedule was so Spaeth could take the bus to and from work.
For most of Spaeth’s time working at Walmart, her shift started at 12 p.m. and ended at 4 p.m. She often had to leave a shift at least 10 minutes early and for the most part, these early departures were either approved by a manager or not counted against her.
But starting in April 2013, Walmart updated its scheduling guidelines, which placed greater emphasis on employee attendance and punctuality. Then in November 2014, Walmart changed its scheduling process to better accommodate the rise in customer traffic during certain times of the day.
Walmart also implemented a new automated scheduling system that changed Spaeth’s shift to 1 p.m. to 5:30 p.m. Spaeth had no issue arriving on time for the start of her shift. But she often left one to two hours before her shift was scheduled to end. Spaeth explained that she wanted her old 12 p.m. to 4 p.m. schedule back so she could catch the bus and make it home for dinner on time.
After Walmart continued to struggle with working with Spaeth concerning her scheduling needs, in July 2015, Walmart fired Spaeth for excessive absenteeism. Walmart also refused to rehire Spaeth and claimed that it never received a request for a reasonable accommodation by Spaeth or anyone else asking on her behalf.
In January 2016, Spaeth filed a charge of discrimination with the EEOC alleging that Walmart violated the Americans with Disabilities Act of 1990 (ADA) when it disciplined her, refused to accommodate her disability, fired her and chose not to rehire her. Ultimately, the EEOC filed a lawsuit on Spaeth’s behalf in January 2017.
In the lawsuit, the EEOC asked for Spaeth to be reinstated, as well as back pay, compensatory damages and punitive damages. After a four-day trial, the jury took just three hours to conclude that Walmart violated the ADA.
The jury awarded Spaeth $150,000 in compensatory damages (for emotional pain and mental anguish) and $125 million in punitive damages. However, due to statutory caps on recoverable damages under the ADA, this amount was to be reduced to just $300,000.
Because of the size of the original verdict, this case made quite a few headlines. But it reminded us about two important facts about many employment law cases.
First, that when juries perceive an injustice in the workplace, they will often do what they can to remedy it. Second, damage caps can drastically affect the amount of monetary recovery that’s available to a plaintiff.
Runaway Juries Aren’t Common
In the vast majority of cases, juries will try to reach a verdict that they believe is fair to all parties. It might appear that in some cases, a jury was unreasonable in its verdict by trying to give a plaintiff a major payday or windfall. But this perception is usually incorrect because there are several critical facts that the public doesn’t know about that would explain the jury’s verdict. A perfect example of this is the now famous McDonald’s hot coffee lawsuit.
All Spaeth wanted was to adjust her schedule back to the one she had for over a decade. Walmart is one of the most successful companies in the history of human civilization, and is no stranger logistical coordination. Yet it refused to adjust her schedule by a single hour.
A massive jury verdict in a civil case is almost never about trying to make a plaintiff rich. Rather, it’s about punishing the clear wrongdoing by a defendant.
The jury in Spaeth’s case concluded that Spaeth had a disability recognized by the ADA which warranted a reasonable accommodation from Walmart. The jury was likely upset by the fact that Walmart could have easily give Spaeth the schedule she wanted, but made a conscious decision not to. It wouldn’t be surprising to learn that the jury wanted to send a message to Walmart just as much as the EEOC did.
Many federal anti-discrimination laws place caps on the monetary damages a plaintiff may recover in a successful employment lawsuit. For example, under the ADA, compensatory and punitive damages may not certain limits based on the size of the employer:
- 15 to 100 employees: $50,000
- 101 to 200 employees: $100,000
- 201 to 500 employees: $200,000
- 501 and more employees: $300,000
Because Walmart has more than 500 employees, the $300,000 cap applies to them. This cap doesn’t apply to back wages, front pay or consequential damages. But unfortunately for Spaeth, the jury didn’t award her any of those damages.
Even if these statutory caps didn’t exist, the $125 million punitive damage verdict wouldn’t survive an appeal. This is because there are constitutional limits on how big a punitive damage award can be in relation to the compensatory damages.
There are no bright-line rules about the limits on punitive damages. But absent an extreme situation, the ratio between punitive damages and compensatory damages cannot exceed 9:1.
If the ratio of punitive to compensatory damages reaches 10:1, it’s almost guaranteed that a court will conclude that the punitive damage award violates the defendant’s due process constitutional rights. And in the typical civil case, courts aren’t likely to accept punitive damage awards that are more than four times the compensatory damages (4:1 ratio).
So looking at Spaeth’s case, the largest her punitive damage award could theoretically be is $1.35 million. And most likely, a court would limit it to $600,000 ($150,000 x 4).
Summing It Up
If a jury in an employment lawsuit awards a multi-million dollar verdict in favor of the plaintiff, it’s probably because the jury felt the employer did something egregious or was otherwise unreasonable in how it treated the employee.
Punitive damage awards must bear some “reasonable” relation to the compensatory damages awarded. Typically, the ratio between punitive and compensatory damage must not exceed 4:1. If they exceed 9:1, the punitive damages are almost guaranteed to be reduced by a judge.
Ultimately, while it’s unfortunate that such caps exist for the damages discrimination victims can receive, it’s a nice change of pace for large corporations to be held accountable for such behavior nonetheless.