How To Avoid Punitive Damages in a Title VII Case - Measuring up to Kolstad

Three years ago, the Supreme Court's decision in Kolstad v. American Dental Association (U.S. 1999) provided that employers should not be held vicariously liable for punitive damages in a Title VII case where a manager's actions were contrary to an employer's good faith efforts to comply with Title VII. Today, the Fourth Circuit explained what that might mean in holding that a district court erred in not striking a punitive damage award. According to the opinion in Bryant v. Aiken Regional Medical Center (4th Cir. 6/27/03) [pdf], the employer had done the following:

That policy, a version of which was included in the employee handbook, stated that "all persons are entitled to equal employment opportunity regardless of race" and that "it is and shall continue to be our policy to provide promotion and advancement opportunities in a nondiscriminatory fashion." ARMC also created a grievance policy encouraging employees to bring forward claims of harassment, discrimination, or general dissatisfaction, and employees were explicitly informed that they would not be retaliated against for making a complaint. There was also a carefully developed diversity training program that included formal training classes and group exercises for hospital employees. And ARMC voluntarily monitored departmental demographics as part of an ongoing effort to keep the employee base reflective of the pool of potential employees in the area.

Given all this, the Court found it improper to assess punitive damages against the employer. Whether an employer must do all that ARMC did to meet the Kolstad mandate will still have to be played out, but the 4th Circuit has at least provided a blueprint for an employer's safe harbor.