By: Tiffanie Benfer, Esq.
Two weeks ago the Third Circuit Court of Appeals in Eshelman v. Agere Systems ruled that prevailing Plaintiffs in employment discrimination cases are entitled to be made whole for injuries caused by employer discrimination.
Eshelman argued that the taxes she would have to pay on the lump sum award of back pay would be higher than what she would have had to pay in the normal course of her employment had she not been discriminated against. In some cases, a lump sum payment award places the employee in a higher tax bracket for that year. A straight award of back pay would therefore, not make the employee “whole” for the damages incurred as a result of the employer’s discrimination.
Eshelman asserted that an additional monetary award was warranted to offset the negative tax consequences of the back pay award she received in her favorable finding. Eshelman’s argument is completely logical. To make her pay higher taxes on income she would have earned but for her employer’s discrimination would just add insult to injury.