Back Pay and Front Pay May Not Be the Only Economic Damages in Employment and Discrimination Lawsuits
In matters of wrongful employment termination and employment discrimination lawsuits, economic losses are generally determined as lost back pay and lost front pay, inclusive of the value of relevant employee benefits. (To simplify this discussion, I refer to termination and discrimination collectively as termination.) Alternatively, in matters of personal injury, economic losses come under the general headings of lost earnings or lost earning capacity. Back and front pay are considered an equitable remedy, an action designed to make the plaintiff “whole,” to restore him/her to the economic position he/she would have been in but for the termination. On the other hand, lost future earnings and lost earning capacity are compensatory damages. Also called actual damages, compensatory damages pay the claimant for loss, injury, or harm suffered as a result of another’s breach of duty.
Back pay is the wages/salary plus employee (fringe) benefits the employee would have earned working for the terminating employer from the date of termination until the trial date. Any mitigating earnings should be subtracted from back pay to determine the loss. However, it is important to note that it is possible that the employee’s earning capacity may have been harmed during the back pay period if, for instance, he/she suffers adverse reputational effects from the termination. Such economic damages are in the realm of compensatory damages.
Front pay is an extension of back pay, compensation the worker would have received from the defendant-employer from the trial date until the worker is reinstated in his/her former job, or in the natural course of employment, would have left to work for another employer, or finds alternate employment earning comparable wages and benefits. Front pay in employment cases is often limited by judges in terms of time after a given date (usually the trial date) to, for instance, account for the probability the employee would, for reasons not related to the termination, not have remained employed with the defendant employer in question. Similarly, there can be an assumption the terminated employee will be able to re-establish his/her pre-termination level of earnings within the judge’s prescribed time limit through other, mitigating employment. However, loss of earning capacity can ensue if the worker is unable to find work at an equal level of compensation, or incurs adverse career effects from the termination or, possibly, if his/her rate of advancement is negatively affected by being forced to change jobs. Thus, in certain cases, although the front pay time horizon may be limited, a period of lost earning capacity is not necessarily limited.