SJC Reinstates $500K Award of Punitive Damages in Employment Discrimination Claims

employment discrimination massachusettsThe Massachusetts Supreme Judicial Court has reinstated a jury’s punitive-damages award of $500,000 in a sexual harassment employment discrimination case after the trial judge had taken it away.

The case occurred when the employer, an auto dealership, failed to take adequate remedial measures after it was put on notice that there was a hostile work environment and sexual harassment occurring against a female employee. This case decided that it was outrageous or egregious enough to keep the jury’s award of punitive damages.

The lawsuit was filed under Chapter 151B, the Massachusetts Anti-Discrimination Statute. Chapter 151b prohibits discrimination based on a wide variety of categories, including gender, sexual orientation, race, religion, national origin, and disability.

The case started when the female employee of an auto dealership was fired from her position as finance manager. The dealership claimed that she was fired because her relationships with her co-workers had deteriorated. For the past 18 months, however, she had complained to her supervisor about sexually offensive incidents.

Specifically, another employee had “habitually and graphically sexually harassed her,” making comments about her body and asking her to sleep with him. The comments occurred almost every day. The harassing employee had also inappropriately touched her.

When the female employee sued the dealership, she sued based on sexual employment discrimination and for unlawful termination.

At trial, the jury awarded her $40,000 in compensatory damages and $500,000 in punitive damages. The auto dealership filed a motion to eliminate the punitive damage award, which the trial court granted. The court held that an employer “may not be held vicariously liable for punitive damages” under Chapter 151B.

The SJC reversed the trial court’s elimination of punitive damages. The employer’s actions, it said, resulted in a “formidable barrier” to the employee’s full participation in the workplace. One an employer is on notice of the offensive behavior, it must take actions to address the complained-of behavior.

Here, said the SJC, a reasonable jury could have found that the dealership was on notice of the sexual harassment but did not address it. Numerous management-level employees were award of or saw the harassment, but they failed to adequately address it.

The SJC then reinstated the jury’s award of punitive damages for the sexual harassment.

This case shows that once employers know of harassment or discrimination, they are legally required to take affirmative steps to correct it. Otherwise, they may be subject to punitive damages under Chapter 151B, the Massachusetts Anti-Discrimination Law.

The case is here: Gyulakian v. Lexus of Watertown

Joe Culik

Joe Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.