What Does it Mean to “Mitigate Your Damages” In an Employment Case?
If an employer unlawfully fires an employee because of, for example, their age or gender, or because they are a whistleblower, then the employee can win significant lost pay damages in court. In fact, Title VII of the 1964 Civil Rights Act and related laws require the employer to pay lost pay damages (usually referred to as backpay and front pay) if discrimination is shown. But the employer can wipe out the employee’s claim to a lost pay award if it proves that the employee failed to mitigate their damages; that is, they did not make reasonable efforts to find a new job.
The Failure To Mitigate Defense
Under Title VII, courts are generally required to award lost pay to a victim of discrimination. But Title VII also mandates that the employee has a duty to minimize their economic damages. Specifically, the statute requires that “interim earnings” the employee could have earned “with reasonable diligence” shall reduce the backpay award. 42 U.S.C. § 2000e–5(g)).
To illustrate, suppose Paula Plaintiff was fired from her $200,000/year job because she complained about sexual harassment. Assume Paula was unemployed for 6 months (despite making a reasonable effort to find another job), and then found and remained in a new job making $200,000/year. Paula’s backpay period would be the six month period between her termination and getting the new job. As a result, her backpay would be half a year of salary, equaling $100,000 (not including fringe benefits, pre-judgment interest, etc.).
Suppose, however, Paula did not use “reasonable diligence” to find other suitable employment and simply sat idle and unemployed. In this scenario, Paula likely forfeited her right to any backpay damages.
Notably, the employer bears the burden of proof to show both the amounts that must be deducted from your back pay award and that you failed to make a reasonable effort to find a new job.
Likewise, most courts have held that the failure to mitigate defense does not apply to other types of damages, such as compensator/emotional distress or punitive damages.
What Type Of Job Must The Employee Seek?
While employees must make a reasonable effort to secure suitable employment after an unlawful termination, they will not be forced to “go into another line of work, accept a demotion, or take a demeaning position.” Ford Motor Co. v. EEOC, 458 U.S. 219 (1982). Rather, the plaintiff “forfeits his right to back pay if he refuses a job substantially equivalent to the one he was denied.” Id.
Put another way, an employee needs to make diligent efforts to find a comparable job but is not required to restart their career in an unfamiliar field/industry. Nor must the employee go from a senior management role to an entry-level position, for example.
Key Takeaways About The Failure To Mitigate Defense
It is important to make reasonable efforts to find another comparable job if your employer has fired (or refused to hire) you based on what you believe was a discriminatory reason. You should also keep records of your job search efforts to demonstrate the steps you took to land a new job. Finally, you may want to speak with an experienced employment attorney who can help guide you through the process of negotiating with and litigating against your employer.