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The Mitigation of Damages

Introduction

Many federal employment laws permit courts to award damages to a prevailing plaintiff, also known as the employee, in employment law cases, after a court has entered a judgment against the defendant employer on the issue of liability. In situations involving unlawful termination, failure to promote, or failure to hire, the main form of damages is known as wage damages. When a court finds unlawful termination or failure to hire by the defendant, a plaintiff can recover back pay, which is what the plaintiff would have earned had he or she been hired or not been unlawfully terminated. When a court finds unlawful failure to promote, the plaintiff can recover wage damages amounting to the difference between what the plaintiff earns and what the plaintiff would have earned had he or she been promoted.

The purpose of an award of back pay is to make the plaintiff whole, as though the unlawful action never occurred. There are other types of damages a plaintiff can potentially recover in employment law cases, which serve other purposes, such as to punish the defendant for its unlawful behavior or to compensate the plaintiff for other non-wage-based losses.

Mitigation

Plaintiffs can seek damages for lost wages from the time of the discriminatory act through the court’s entry of judgment against the defendant. However, a plaintiff seeking back pay for unlawful termination or failure to hire must make a reasonable and good-faith effort to mitigate his or her damages. In other words, a plaintiff must reasonably seek employment substantially equivalent to the position he or she was denied or terminated from. Once the plaintiff obtains subsequent employment, he or she then has a duty to use reasonable diligence to maintain that employment.

Typically, in this situation, the plaintiff could recover full wage damages from the time of the unlawful act through when the plaintiff secures new employment. If the plaintiff earns more money from the subsequent employer, then the plaintiff’s back pay damages are cut-off, and the plaintiff cannot recover additional wage damages from the defendant. Alternatively, if the plaintiff earns less money from the subsequent employer, then the plaintiff can recover the weekly difference between what he or she earned from the defendant and what he or she now earns from the new employer. In this situation, the plaintiff can recover the mitigated weekly difference from the time he or she secured the new employment through when the court enters a judgement against the defendant. If the plaintiff was already earning additional income from some other source, outside of the defendant’s business, such earnings are not deducted from an award of back pay. One of the most common sources is unemployment compensation.

Leaving the Second Employer

As mentioned above, once a plaintiff secures subsequent employment, he or she must use reasonable diligence to maintain said job. Courts review mitigation issues on a case-by-case basis as they are particularly fact sensitive. Generally, if the plaintiff voluntarily removes himself from the job market or workplace, the plaintiff has forfeited his or her rights to back pay, this includes situations where an employee has secured subsequent employment but ultimately resigns from the job. However, there is an exception if the employee is leaving due to unreasonable working conditions or to seek better employment opportunities. Additionally, if an employee is terminated from the second employer, unable to work, attending school, or is otherwise not seeking substantially equivalent employment, the plaintiff’s back pay award will likely be cut-off from that respective date.

If you feel your employment rights have been violated, or if you have any other questions regarding employment matters, please contact the experienced Birmingham employment law attorneys at Wrady Michel & King. You can contact us either online or by calling us at (205) 319-9724. We are here to serve you.