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Wisconsin Legislature Passes New Law for Compensatory and Punitive Damages in Equal Right Claims

Wisconsin’s democratically controlled legislature has passed legislation that will authorize courts to impose steep penalties on Wisconsin employers that discriminate against employees, despite objections that this law could lead to more litigation and fewer employment opportunities in Wisconsin. The State of Wisconsin’s democratic legislators, like the federal legislative agenda, are committed to making it more challenging for employers, small and large. Late in April, Wisconsin’s Senate passed SB 20 and the Assembly passed the companion bill, AB31, which make compensatory and punitive damages available in state discrimination cases. This legislation creates the highest remedies among all 50 states.

Although this legislation has been called the “Equal Pay Enforcement Act,” much more than equal pay is covered. Specifically, it covers any and all acts of discrimination (e.g., hiring, firing, promotion, demotion, etc.) on the basis of any of the 13 protected categories in Wisconsin (age, race, creed, color, disability, marital status, sex, national origin, ancestry, arrest record, conviction record, membership in the national guard or military reserves, or use or non-use of lawful products off the employer’s premises during nonworking hours). Indeed, if this were truly about providing equal pay, then there would be no need for the extra remedies of compensatory and punitive damages.

Here’s how the new law would work:

  1. After the completion of all administrative proceedings before the Department of Workforce Development (DWD) and the Labor and Industry Review Commission (LIRC) concerning the violation, and assuming there is a finding that discrimination has occurred, a claim for these extra damages can then be filed in a Wisconsin Circuit Court.
  2. The court (or a jury) can then determine whether compensatory and punitive damages should be awarded.
  3. If the court (or jury) finds it appropriate to award compensatory and punitive damages, it can do so subject to the following caps based on the size of the employer:

    • 16-100 employees $50,000
    • 101-200 employees $100,000
    • 201-500 employees $200,000
    • over 500 employees $300,000

Governor James Doyle has indicated that he will sign this legislation. Although the DWD estimated that fewer than 10 such cases would actually be litigated in Circuit Court each year, a number of Republicans have opposed this law on the basis that many more cases are likely to be filed, some of which will simply be frivolous attempts to seek a settlement for less than what it would cost the employer to defend the lawsuit. The question may be moot, however, because employers may be motivated to settle doubtful, or even baseless, claims to avoid the cost of defending these lawsuits.

This legislation is all but certain to place an additional burden on employers, and change the landscape of employment litigation in Wisconsin. Although there may be significant constitutional issues with this legislation (including bifurcating liability and damage decisions, if that is how this law is applied), it could be years before those issues are fully resolved.

Although the new law does not set forth any specific guidelines for determining whether and to what extent compensatory and/or punitive damages should be granted, it does incorporate, by reference, the standard set forth at Section 895.043(3) of the Wisconsin Statutes.  According to that provision, a “plaintiff may receive punitive damages if evidence is submitted showing that the defendant acted maliciously toward the plaintiff or in an intentional disregard of the rights of the plaintiff.”  To better understand this, it is helpful to review the way in which this standard has been applied in other cases.  For cases tried before a jury, for example, model instructions have been developed regarding this, and other issues the jury must decide.  According to the jury instruction on punitive damages, the following definitions and analysis should be applied:

  1. The term “malicious” is generally defined as the proof of hatred, ill-will, desire for revenge or an intended insult or injury.
  2. Intentional disregard requires proof:
    1. that it is deliberate,
    2. that the employer disregarded the employee’s safety, health or life, a property right, or some other right, and
    3. it was sufficiently aggravated to warrant punishment by punitive damages.

For compensatory damages, although the state instructions are minimal, the federal instructions may be more helpful in understanding this concept. These damages include proof of:

  1. Physical and mental pain and suffering.
  2. The reasonable value of medical care.
  3. Other expenses (other than lost wages) incurred as a direct result of the employer’s discrimination.
  4. Any other loss (other than lost wages) caused by the employer to the employee’s future earning capacity.

These are terms and now issues each employer must weigh when faced with these types of claims. We will continue to monitor these changes and report on significant interpretations.

Thomas P. Krukowski, Esq.
Krukowski & Costello, S.C.

Legislative Partner

Krukowski &
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Margie Harvey

Margie Harvey, SPHR
Miles Kimball Company 
250 City Center
Oshkosh, WI  54906
Ph: 920.232.6409
Fx: 920.231.1247   

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