Written ADA Policy Not Enough To Avoid Punitive Damages
 
September 1, 1999
 

Employers may now be held vicariously liable for punitive damages under the Americans with Disabilities Act (ADA) even where the employer has a written policy on discrimination.

Earlier this year, in Kolstad v. American Dental Association, the United States Supreme Court addressed the circumstances under which a jury may consider a punitive damage request in a federal discrimination lawsuit. The Supreme Court based its decision on the Civil Rights Act of 1991 (Act), which provides that, in addition to the requirements for compensatory or out-of-pocket damages, an award of punitive damages requires proof that the employer engaged in discriminatory conduct with malice or reckless indifference to the federally protected rights of an aggrieved individual. Noting that intent of the Act was to impose a higher standard for recovery of punitive damages in workplace discrimination cases, the Supreme Court concluded that a punitive damages award requires, at a minimum, a showing that an employer engaged in the alleged discriminatory conduct in the face of a perceived violation of federal law.

This higher standard may lead employers into a false sense of security that they are at least protected from liability for punitive damages where they have a written policy against discrimination. The existence of a policy is no longer enough, insisted the United States Court of Appeals for the Tenth Circuit in Wal-Mart Stores, Inc. v. Eduardo Amaro, decided on August 23, 1999. According to this federal appellate court, an employer who fails to provide training to its managers about the requirements of the ADA is at risk for liability for punitive damages even where a written policy exists.

Wal-Mart hired an employee, Amaro, knowing that Amaro was hearing impaired and that he would sometimes need an interpreter. When Amaro refused to attend a training session which he could not understand without the aid of an interpreter, his supervisors failed to provide an interpreter and then transferred him from a receiving position to a janitorial position. The supervisors again failed to provide Amaro an interpreter to discuss his transfer and suspended him when he objected to what he perceived as a demotion.

The federal appellate court affirmed the lower court's rejection of Wal-Mart's argument that its preparation and dissemination of an ADA compliance manual should defeat the imposition of vicarious liability for punitive damages.

The court noted that the store manager who approved Amaro's suspension was familiar with the accommodations requirements of the ADA and its prohibition against discrimination and retaliation in the workplace. Thus, Wal-Mart acted in the face of a perceived risk that it was violating federal law sufficient for the imposition of punitive damages even though it had a written policy.

All well-counseled employers should already have written ADA compliance policies. Since the same analysis that applies to punitive damages claims in ADA actions also applies to punitive damages claims in sexual harassment and age, race and national origin discrimination actions, there is no better time than the present to review your anti-harassment and anti-discrimination policies. All employees should have a copy of your most current policies and your management-level employees should be trained in complying with those policies.

For more information, please call Patricia Nance at 1-888-688-8500.

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