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Supreme Court Creates Potential Safe Harbor For Employers In
(RIVERWOODS, ILL., June 25, 1999) -- While the Supreme Courts recent
decision in the employment discrimination case of Carole Kolstad v. American Dental
Association is being viewed by some as a blow to employers nationwide, companies that
take a closer look at the high Courts decision will find both a safe harbor and
important guidance on how they can minimize the risk of costly punitive damages, according
to CCH INCORPORATED, a leading provider of human resources and employment law information.
"If businesses only focus on the fact that, as a result of the Courts
decision, it will be easier for employers who violate antidiscrimination laws to be held
liable for large punitive damages, then they are missing the much bigger picture
and a very big opportunity created by the decision," said Eric Bryn, JD, CCH
human resources and employment law analyst. "Kolstad charts a course for all
employers who want to protect themselves from these additional significant damages."
Good Faith Gives Employers a Safe Harbor
In the Kolstad case, an employee sued and sought punitive damages against her employer,
asserting that she had been passed over for a promotion based on her gender in violation
of Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination.
The Court, reversing a federal appeals court decision, held that punitive damages may
be awarded for intentional violations of Title VII without a showing that the employer
engaged in independently egregious conduct. However, in a separate vote, the Court refused
to hold employers vicariously liable for managers' discriminatory employment decisions
when those decisions are contrary to the employer's good faith efforts to comply with
"The Supreme Court actually rewarded employers who make good faith efforts to
implement antidiscrimination programs by providing them with a defense to punitive damage
awards," said Bryn. "Now, its incumbent upon employers to take the
necessary steps that will allow them to take advantage of the safe harbor created by the
Court and defend against discrimination committed by managerial employees."
Establishing A Good Faith Defense
CCH has identified several steps that employers can take to create effective
antidiscrimination programs and establish a good faith defense to punitive damages when
managers violate Title VII.
Key actions for employers include:
- Establishing and communicating an antidiscrimination policy. The policy should state
that the employer is committed to equal employment opportunity for all persons regardless
of race, color, religion, sex, marital status, national origin, citizenship status,
disability, veteran status or other forms of protected status established by state or
federal law. The policy also should: state that it extends to all aspects of the
employment relationship; establish a procedure to complain about violations of the policy;
and affirm the companys commitment to investigate complaints and take appropriate
action against employees or managers who violate the policy.
- Communicating the policy through corporate intranets, recruitment literature,
application forms, handbooks, training, employee orientation, annual reports and other
- Reviewing existing policies and practices for compliance with antidiscrimination rules.
For example, ensure that managers and supervisors are not asking improper questions at
- Training managers and supervisors about the employers obligations under employment
discrimination laws, including who is covered by the law, what types of actions constitute
discrimination and what steps should be taken to avoid discriminatory practices.
- Monitoring all employment actions, such as hiring, discipline, promotion, demotion,
staffing, layoffs, termination, wage and salary actions, transfers, training, and working
conditions for compliance with discrimination laws.
- Staying up to date with current developments to demonstrate a good faith attempt to
understand employer obligations under federal employment laws.
- Considering a workplace diversity program to further demonstrate commitment to a
It is also very important that employers consult state and local laws to determine what
additional requirements may be imposed.
About CCH INCORPORATED
CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment law information
and software for human resource professionals, including Human Resources Management,
Pension Plan Guide, Benefits Guide and Payroll Management Guide. CCH also provides tax and
business law information in print and electronic form for accounting, legal, health care
and small business professionals. CCH is a wholly owned subsidiary of Wolters Kluwer U.S.
The CCH web site can be accessed at www.cch.com.
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