During the legislative session, State Bar members offer their opinions on the bills affecting their practice areas. The following is the opinion of the State Bar members authoring the article. It is not necessarily that of the State Bar or its sections.

Thomas N. Shorter

Daniel J. Finerty

John A.
Haase

By John A. Haase, Thomas N. Shorter, and Daniel J. Finerty, Godfrey & Kahn, S.C.

June 16, 2009 – Gov. Doyle signed Senate Bill 20 into law on June 8, 2009. S.B. 20, now known as 2009 Wisconsin Act 20 (Act 20), authorizes Wisconsin Circuit Courts “to order a person who engages in discrimination in employment, unfair honesty testing, or unfair genetic testing [in violation of the Wisconsin Fair Employment Act] to pay compensatory and punitive damages.” These damages may be awarded in addition to any equitable damages awarded in an administrative action in front of the Wisconsin Equal Rights Division (ERD), not to mention any damages sought or awarded in a federal court action.

Although the issue is still under review, the legislative change may violate the Seventh Amendment to the U.S. Constitution and Article I Section 5 of the Wisconsin Constitution, which both guarantee the right of trial by jury. Notably, Act 20 authorizes a circuit court to order the defendant to pay compensatory and punitive damages “in an amount that the circuit court or a jury finds appropriate.” However, in doing so, Act 20 puts the “cart before the horse” and does not provide the defendant employer the right to jury trial on the underlying issue of liability for discrimination. An ERD hearing on the merits presided over by an administrative law judge likely does not fit the definition of a “jury trial” under either constitutional provision.

Here are some highlights of the new law:

• If an administrative law judge (ALJ) determines that discrimination occurred after a Hearing on the Merits, the ERD will mail the decision along with a notice to the complainant that he or she may bring an action in circuit court to recover compensatory and punitive damages as well as the time limitations for doing so. Act 20 does not authorize the filing of an action unless and until: (1) a hearing on the merits has taken place (i.e., Act 20 does not implicate hearings on the issue of probable cause); and (2) the ALJ makes a finding of a violation of the Wisconsin Fair Employment Act, as set forth above.

• Proceedings in front of the ERD must conclude prior to the filing of any such lawsuit in a circuit court. Thereafter, any civil action must be filed within 60 days of the date of mailing of the final decision by the ERD or its appellate body, the Labor and Industry Review Commission, to the complainant.

• The Department of Workforce Development itself is also authorized to file such an action to recover compensatory and punitive damages, which is more likely to occur in cases of alleged class-based discrimination, as opposed to individual cases.

• Compensatory and punitive damages may be sought in addition to any back pay remedy, reasonable costs, and attorney fees incurred in the action, or other amount awarded under existing Wisconsin law. Such damages may be awarded by a judge or by a jury, which sets up the right to a jury trial on the issue of this new damage category.

• Compensatory damages include future economic losses and for pain and suffering, emotional distress, mental anguish, loss of enjoyment of life, and other noneconomic losses.

• Punitive damages may be awarded, but are subject to the existing limitations on such awards under Wisconsin law contained in Wis. Stat. § 895.043. Under this provision, to be entitled to such an award, the plaintiff must show “the defendant acted maliciously toward the plaintiff or in an intentional disregard of the rights of the plaintiff.” Wis. Stat. § 895.043(3). Assuming the plaintiff makes a prima facie showing for the allowance of punitive damages, “[t]he plaintiff may introduce evidence of the wealth of a defendant” and request a special verdict form on the question of punitive damages from the circuit court. Wis. Stats. § 895.043(4)(a) - (b).

• The combined compensatory and punitive damages that may be awarded under Act 20 are capped based on the number of employees working for the employer in each of 20 or more calendar weeks in the current or preceding year:

• If the employer employed 100 or fewer employees during this period, damages are capped at $50,000.

• If the employer employed more than 100 but fewer than 201 employees during this period, damages are capped at $100,000.

• If the employer employed more than 200 but fewer than 501 employees during this period, damages are capped at $200,000.

• If the employer employed more than 500 employees during this period, damages are capped at $300,000.

• Entities that are exempt from coverage under Act 20 include “any local government unit, as defined in [§] 19.42(7u), [Wis. Stat.] or [...] any employer, labor organization, or employment agency employing fewer than 15 individuals for each working day in each of 20 or more calendar weeks in the current or proceeding year.”

• The change brought about by Act 20 will go into effect the second day after publication of the 2009 - 2011 biennial budget act, which is still under debate in the Wisconsin Legislature.

In short, business attorneys need to be prepared for this new change in Wisconsin law, which likely will lengthen the time between a complainant’s initial filing of an ERD claim and a final resolution of harassment, discrimination, and retaliation cases filed under the Wisconsin Fair Employment Act. An early analysis of whether settlement is the most cost-effective option should be performed. If a defense is the preferred option, laying the groundwork for a solid defense early on, including any potential constitutional arguments and other affirmative defenses, will yield greater success down the road and perhaps lessen the overall costs of achieving that success.

John Haase, Valparaiso 1991, Thomas Shorter, Northeastern 1996, and Daniel J. Finerty, Marquette 1998, practice labor and employment law with Godfrey & Kahn, S.C. in Green Bay, Madison, and Milwaukee, respectively.

• Have a different opinion? Post a comment.